PERTH (miningweekly.com) – Gold miner Westgold Resources has reported higher gold sales and revenue for the first half of the 2022 financial year, however, profits fell as operating costs increased.

Gold sales for the first half of the 2022 financial year increased by 5% on the previous corresponding period, from 125 197 oz to 131 917 oz, resulting in a 3% increase in revenues, from A$301.8-million to A$311-million.

However, Westgold on Friday reported that net profits after tax declined by 60% in the same period, from A$69.8-million to A$27.7-million, while earnings before interest, taxes, depreciation and amortisation dropped by 27%, from A$144.5-million to A$106.2-million.

“Our operating results to December 2021 reflect an increasing percentage of our major mines achieving or transitioning to steady-state. Our operating teams have delivered for two record quarters of production under difficult circumstances and continue to do so despite the myriad challenges caused by Covid-19,” said executive director Wayne Bramwell.

The company told shareholders that labour shortages in the resources sector persisted during 2021 with continued border closures and the rapidly imposed Western Australian government vaccination mandates requiring fly-in, fly-out workforces to be fully vaccinated causing disruptions during the December 2021 quarter.

Like most Western Australian mine operators, Westgold was looking to supplement its operational teams with contract staff to fill vacant positions, however, the miner noted that the use of contract staff, when available, comes at a higher cost and with the continuing border closures owing to the threat of the Omicron strain, the resultant skills shortage and supply chain pressure-related knock-on cost impact in Western Australia continues unabated.

Westgold reported a 20% increase in all-in sustaining costs during the half-year under review, rising from A$1 377/oz in the six months to December 2020 to A$1 646/oz. Cost of sales increased by 22%, from A$228.7-million to A$278.9-million.

“At a corporate level, Covid-19 has required all companies to reassess key business risks. On that basis Westgold made additional financial investments in several critical areas during the first half to mitigate potential operational disruptions. The investment made in building surface stocks, increasing critical spares and consumables inventory impacted short-term financial metrics but the trade-off was considered prudent as this investment can insure future cash flows,” said Bramwell.

“Westgold can now turn to leveraging these investments, focussing on continuous improvement around cost management and increasing profitability during the second half.”