Given the current market expectations of a higher POG and the...

Given the current market expectations of a higher POG and the speed at which it has increased the following maybe a plausible scenario. Note there are a lot of IF’s in the scenario and the key if is for the POG to remain at current levels or higher.

In the 12 months to December 2023 WGX realised POG was $2,820 which is an amazing $600 below the current spot POG. ASIC during this period was $2,011.

Looking forward, which is what the stock market does if WGX achieves the mid-point of ASIC guidance of $1,900 and the POG remains at the current spot price then WGX with production of 250,000 Oz will see profit increase by $122.5m after tax ($175m before tax). The net profit after tax for the 12 months to December 2023 was about $80m and that would increase to $202.5m in the next 12 months an increase of 153%.

At the current market cap that profit is a forward PE of 6.1. If WGX re-rated to a forward PE of 10, which is an undemanding PE, the SP would be about $4.30. And if it re-rates to a forward PE of 15 the SP may be about $6.40 nearly 2.5 times the current SP.

If all the expert forecasts are correct for the POG this year of between $US2,200 and $US2,300 (some are higher but let’s ignore those) then WGX and almost all gold producers are in for a serious re-rating in the rest of 2024 and into 2025. And if POG, goes above $US2,300 then WGX SP could double along with all other gold producers. I won’t be surprised to see POG get to $US2,500 later this year but we do not need to see POG go that high for WGX and all other gold producers to be substantially re-rated.