A weak quarter saved by the fact that gold hedging has ended....

A weak quarter saved by the fact that gold hedging has ended.

Increased costs seem to be a major problem both in Australia and in north American mining.

The headline cash margin of $800/ounce above AISC looks OK, but this has to pay for a lot of new capex and exploration expenditure. There may not be much surplus cash over the next 3-4 quarters due to capex on mine development, so the cash build up could be very small.

Any dividends paid is likely to be skimpy in order to maintain cash balance for M&A.

I am suprised the share price is holding up so well.

WGX needs to get to 300k ounces pa so it can drive average cost down and only then could we see it trading at around $3.00. Not expecting WGX to get over $2,50 this year without a significant rise in the gold price. Fortunately gold imports have recovered in both India and China, and central banks have been buying gold to add to their reserves.

There is no chance WGX would take over SPR - it is just too expensive and high risk. There are cheaper options to expand ounces via exploration and takeover of some near by smaller assets.

GLA.

loki