So in Jan and Feb they did 191.2kt = 3.24kt/day at Big Bell. In the Dec Q, they did 294kt = 3.20kt/day. but the best bit is that the grades in Jan/Feb are higher so mined ounces in Jan/Feb were 9% higher at 277oz/day vs 254oz/day in Dec Q.
They “broke even” in the Dec Q with cash stable at $159m between the end of the Sept Q and Dec Q.
If they can: 1. Keep costs stable (let alone make them go down with transitioning to gas powered plants instead of diesel and other operational efficiencies) 2. Keep production at or above 240,000ozpa and 3. if the good price stays where it is with their hedging running out by July, they’ll be selling gold at $400/oz more than in December which is as additional $96m in FCF per year.
I’m much more confident of 1 & 2 being achieved than I was before after this operational update and view the company as greatly undervalued given the FCF set to be generated vs the EV at present. I wouldn’t be surprised if cash on hand drops a little this quarter with hedging still in place and costs for the new power plants being incurred but think this looks very likely to be a successful turn around story with the added bonus of the hedge book running out with gold moving higher.
WGX Price at posting:
$1.09 Sentiment: None Disclosure: Held
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