Ann: December 2023 Quarterly Report, page-19

Finally had time to give the quarterly a good read.
Without doubt, it was a mixed outcome on many metrics, with.... a variety of reasons, which I cannot fault Wayne and the team for explaining (the quarterly is exhaustive and I continue to tip my hat, it covers everything you could possible need to understand the business).

The biggest and arguably most important piece of info was...

FY24 Guidance is re-confirmed.





Which, after reading through the whole quarterly is bold considering the headwinds they faced over the past 3 months.

Q1 FY24 was excellent - 63.1k ounces at AISC $1935
Q1 F24 was... as stated below expectations - 59.2k ounces at AISC $2245
Average ASIC for first half - $2085 AUD
Therefor.... to meet the bottom end of guidance they need to have a strong second half.

Basically produce around 123k at an ASIC of less than $1915 AUD.

Which I do think is possible, but only if, the Great Fingall remnant ore (potentially development ore?) is able to bolster their numbers. As Fender alone is basically just going to replace Paddy's. Though without doubt, Starlight up at Fortnum could also surprise to the upside if the new high-grade Nightfall lode hits its straps.

When I look at the waterfalls for this Q and the sept Q, I feel they tell a much clear picture of how even with the extra $7m hit, the company is performing well. Dec Q on the left == Sept Q on the right.


Fair point @loki01 about how advantageous it is to be unhedged now, as that extra revenue is protecting WGX. But... WGX has always been a high cost producer, so... it was always going to be a play on a higher POG.
I do agree somewhat regarding their next 1-3 quarters of cash build. As Great Fingall and Big Bell Deeps are likely to continue to ramp up, however... if WGX can steady the cost curve, the sport price is going to enable them to keep adding (IMHO).

Other positives -

*All four hybrid power plants are operational (though not at full capacity yet), which should see further reductions in diesel usage and hence costs.
*Fortnum is now once again WGX lowest cost plant (after quite a few quarters of under performance).
*Staff issues are basically eased over the short/medium term due to the closure of the Paddy U/G mine (though of course that means less ounces)
*Fender basically just hitting it's straps
*Great Fingall development ahead of the development study (which hopefully confirms that they will be sources ore before the end of FY24)
*Exploration really ramping up across the whole portfolio of assets (drill rigs hitting Fender first, plus South Junction)

The negatives -
*One off staffing costs of $7m (to bolster staff retention etc). Obviously it just has to be done. Without staff... a mine is just a hole in the ground.
*This $7m in November last year really pushes the AISC higher (approx $120 AUD per ounce). This has obviously influenced the headline AISC figure, which would be closer to $2100 AISC.
*Both Murchison plant's having downtime (bluebird was planned, but it was a major piece of work) and Tuckabianna was unplanned and I read it as being between 3-7% less throughput.
*Paddy closing - high cost, low ounces... but it was a useful source of ore for Bluebird.
*Bluebird U/G mine slightly underperformed, but... extra staff will bring that back
*Big Bell mining a lower grade section in the mine plan

Going with a focus on each Plant.

Fortnum is the star, because of starlight's U/G mine performance. I get the impression that it may be able to get close to 18k per quarter if Twighlight performs, which would be a huge win to balance out the Murchison plants. The potential expansion of the Starlight U/G to getter access the Twighlight high grades will be known later this quarter, so I am getting hopeful we will see Fortnum sort of save FY24.

Bluebird - as @Joelstar points out, it's not running at full capacity nor has it been for ages. Until it does, it will be a drag.
With Paddy gone, it's high AISC will also hopefully help reduce the companies overall figures (for a smallish loss in ounces produced)

Tuckabianna - It will shine when the Big Bell grades start to rise again (and... when Great Fingall ore starts to arrive).

I must admit, whilst I can imagine the WGX team are frustrated about Paddy, I am impressed that Wayne and the team continue to be unafraid to halt, refocus and drill it out, instead of just continuing to produce and lose money all the while, instead of.. doing exactly what they are doing. Drill it out, prove up a mine plan that will actually make money, and then bring it back online in the medium term. Yes of course, they are going to try and put a positive spin on it, but... it also is true, being able to basically have multiple U/G mines gives your operational flexibility. All the more so if they can basically turn Bluebird U/G into a larger, most cost effective mine without needing more staff (though WGX was clear that they are growing).

I have already posted about how excited I am about the exploration and really, it's only just starting to hit it's straps. The exploration spend will ramp up too to approx $8m in this quarter.

To those wondering about the dividend, it's coming -



A challenging quarter to be sure, but... with so much capital being invested into it's flagship U/G mines, WGX is slowly turning the 'ship' towards the correct course (... a long life, profitable miner).