This table summarises WGX's issues in a nutshell. Long story short it needs to fill its mills with higher grade and move away from low grade stockpiles.
All up WGX mills can process 4.1 million tonnes of ore a year or around 1 million tonnes per quarter.
Bluebird 1.8 million tonnes
Tuckabianna 1.4 million tonnes
Fortnum 0.9 million tonnes.
As you can see from the table WGX can't fill its mills falling short of capacity and increasing costs.
Furthermore out of the 872,000 tonnes processed 247,000 or almost 30% was low grade stockpiles (and a little bit of open pit). The stockpiles to be fair don't require mining so there would be some savings there.
Going forward Tuckabianna will be filled by Big Bell and Great Fingall will is expected to mine 1 million and 380,000 tonnes respectively which will fill the mine to 99% capacity.;
There is talk that Bluebird will lift to 750,000 tonnes and Fender will mine about 330,000 tonnes talking total production up to 1.08 million tonnes. That still leaves Bluebird at only 60%. Had Paddy's Flat remained on line it would have taken capacity up to 82%. WGX need to find tonnes for this mill.
Starlight makes up around 560,000 tonnes or 62% of Fortnum Hub. Will Nightfall make up the shortfall - we need greater clarity on that asap.
Long story WGX need to either shut Fortnum mill down and truck Starlight ore to Bluebird or they need to get more mines open.
The last quarterly was below expectations. It was also disappointing that the company failed to disclose the poor performance of Paddy's Flat at the same time they announced good discoveries at Starlight. I like regular updates but it needs to give the good and the bad. The company in my view was deliberately misleading by omitting the information about Paddy's Flat in their early Dec update about Starlight. I found it odd they focused on employment retention issues. i'm sure that's run of the mill for goldies in WA.
WGX is still reasonable value at $2 given its cash backing and high price but WGX need to come out and be clear about its strategy going forward. A mine plan and a couple of new mines are needed if they decide to keep all three mills running.
With Paddys flat out of action, how will it fill the mills - have they looked at going back to 2 mills. They do have 12 rigs running so exploration prospects look good, but ultimately operations need to improve.
Interesting price action today. WGX is off 15% in three days despite gold staying very high at circa $3120 and WGX still saying guidance is on track.
Is WGX looking at something?
GLTA/IMHO
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