Yup - so that wraps up the funding issues.
Now let's see if they can actually execute the plan.
WMX is sitting on very large gold reserves. The cut-off gold price they used for that was optimistic ($2,550 AUD/oz)- but the AUD gold price is getting back up towards that number.
They have also massively expanded the overall resource over the last couple of years. Their resource update from September is impressive reading:
"At the Wiluna Mining Centre alone, total Mineral Resources using a 1.0 g/t cut off is 53.0 Mt @ 3.00 g/t for 5.10 Moz, an increase of 9% for the year (Table 1, page 4).The expanded Resource places the Wiluna Mining Mineral Resource as the 7th largest JORC compliant gold district under single ownership in Australia(1).This places the stand-alone Wiluna Mining Centre Resource in the top 11 Australian gold deposits and compares favourably with the Resource of Northern Star’s nearby Jundee (Mineral Resource of 55.2 Mt @ 3.0 g/t for 5.3 Moz)"
So on paper Wiluna is seriously undervalued - but the reasons for that are easy to see. Disappointment with past production and AISC has been very high.
WMX needs to:
- get that Concentrator built on schedule and within budget
- Actually deliver on the $20m net cash flow from production they estimate for March to September
- Get the concentrator working properly
- Significantly reduce their AISC - current at $1,932/oz
If they can do all that, the SP will absolutely fly. If you believe that is going to happen, then now is the time to buy.
Hopefully the POG will be good to them meanwhile.
Personally, I think they now have the team and the plan to make this work. All they needed was the funding, and they have more of that than originally projected. The concentrator seems to be proceeding well. Exploration results continue to be excellent.
Those are some big "ifs" listed above - and past performance has led to enormous market scepticism.
However for me this feels a bit like when I was buying RMS at 10 cents a few years ago. The market had lost confidence and the SP reflected that, but Ramelius came good in a very big way - and WMX has much greater potential than RMS did back then.
We shall see...
Cheers
Dave
