We may know a bit more of their situation when the June quarterly report comes out. As previously noted by Spec, the gold pre-pay agreement in essence involves an outlay of around $10m per quarter given the current AUD POG - this is the final quarter when such payments will be made.
I suspect the mining contracting business they bought is a dud and costing them plenty. Not sure if any other miner would want to employ them.
But the main factor hurting them, besides not meeting targets, is the 230k ounces of gold hedged at an average of AUD2057, which gets worked off at 10k ounces per month. No doubt the prices received under hedge this quarter are well under $2000/ounce. Almost 50% of production (at recent rates) is hedged.
It is hard to believe that WGX will be unable to make a go of their mining operations unless they are totally incompetent (which is a possibility). The danger for WGX is if Big Bell has operational issues, and/or if the AUD POG drops off significantly before they fix up their mining operations.
Hey, who knows but given how all the other goldrn dogies and near dogies are running, WGX could be back above $2.50 one fine day.
loki (still holding on hopium my reduced level of WGX shares)
WGX Price at posting:
$2.32 Sentiment: None Disclosure: Held
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