Ann: Westgold and Karora Complete Merger, page-11

Hey Loki, I cannot disagree, as @wassa so eloquently summed up, the quarter was average, but there were some logical reasons (weather, trucking), plus, having shut Paddy U/G, they are now dealing with the consequences of it not providing high grade ore to Bluebird. BUT.... this is going to change dramatically over FY25.
Great Fingall looks like it will start adding ounces late in CY24, with the Big Bell deeps in early 2025. Fender is also ramping up, but.... it's only a small U/G mine so can only do so much.

Big Bell had 64kt of stockpile that was partially stuck, which will head straight to Bluebird or Tuckabianna. Which should have a solid impact on this quarter.

WGX has suffered from not having more redundancy for ore sources, albeit they are lucky they had close to 5mt of stockpiles at Tucka and Blueird to use in this period, with.. ever rising gold prices.

I still think some cannot see just how much WGX is investing into it's two newest mines (Fender on needed a small amount, but has a 3-4 LOM currently).
Almost $185m investing in FY24. Which is particularly notable in that they did this whilst also taking a step off the gas in getting first ore from Great Fingall.


Regarding Big Bell Deeps, yes, the AIC is high, at close to $2400 AUD, yet.... by investing over the past 18 months, they are close to realising increased grades and tonnes. Big Bell as a whole, will eventually mine upwards of 1.4mtpa..... enough to 100% fill the Tuckabianna plant. Leaving Great fingal and Fender to truck all their tonnes to Bluebird.

For fun, I chucked in the current spot price... wow. This is just Big Bell. The NPV was close to 70% of WGX market cap before the merger.



The quarterly also touched on Big Bell still having more legs too... it already has a 16 year LOM.


Finally, to the cash position. Excellent question, and I had to dig quite a bit to get a clearer picture, especially, when we still don't know how Karora's June Quarter went...

WGX finished the quarter with $255m in cash bullion. They paid a Div of $6m. They spent $6m on Ora (but I have aleady excluded that). So cashbullion of $250m basically, but... pretty sure they are making good margins over July. There might also be another $6m for the Spinco spinout....

Then you have Karora with approx $90m AUD in cash.

Finally, you have the cash component of the offer... it's not cheap. As Karora basically got 187m shares, with $0.68 in cash, or $127m.



Then the Karora debt of $44m.
And.... who knows how much it cost to get the whole deal done... Lawyers made a bucketful, financial advisers too.

Soo.... $250m + $90m = $340m
$127m to Karora, $44m in debt.
I get $169m, which seems pretty close to their $160m figure?


But... as you say, the debt facility seems to be included, so.... does it cost $100m to pay for a merger this size....? Perhaps there are tax implicated or something I missed.

I can be honest and say I dislike how unclear it is. That is red cross for WGX. I know we will know more soon, and.... the company is fully unhedged, so is going to have a very healthy quarter, even if they just throw low grade stockpiles into their plants...

It's almost, an incredibly opportune time to utilize low grade stockpiles, to then generate free cash flow to invest in better, longer lower costs assets within the company, for the longer term.