PERTH (miningweekly.com) – Gold miner Westgold Resources has hit its 2022 production target on the back of a strong quarter, producing 72 597 oz in the three months to June.

For the full year ended June, Westgold had delivered 270 884 oz of gold, up from the 245 411 oz delivered in the 2021 financial year, and slightly exceeding the guidance of 270 000 oz.

All-in sustaining costs (AISC) for the full year reached A$1 692/oz, up from the A$1 411/oz in the previous financial year, falling within the guidance of between A$1 500/oz and A$1 700/oz.

“The 2022 financial year was a year of major, but successful, transition for Westgold as we delivered on our production guidance to achieve a record result of 270 884 oz,” said MD Wayne Bramwell.

“We made significant strides in resetting and enhancing our operational base despite the challenging macro environment. I am very proud of the whole Westgold team for how they collectively navigated industry-wide headwinds that included supply chain and labour availability constraints, lingering Covid impacts and unrelenting cost inflation.

“In light of these challenges, the renewed leadership team has pragmatically cleansed our balance sheet and enhanced our liquid assets, with the company debt free and holding an extremely healthy A$182.7-million cash and cash equivalents position, which is A$32-million higher compared to the prior corresponding period.

“Crucially, we are swiftly implementing long-term cost control measures, which are already yielding tangible results, such as executing new power and gas contracts that will deliver cost savings of at least A$100/oz at the current diesel price into 2024. Westgold’s long-term organic growth plans are fully funded, and we are consolidating our operations until the current cost and supply chain pressures ameliorate.”

Looking ahead to 2023, Bramwell said that Westgold had taken a conservative approach to the guidance, owing to the uncertainties created by the current inflationary environment and ongoing supply chain constraints.

The miner has set a production target of between 240 000 oz and 260 000 oz, with an AISC of between A$1 900/oz and A$2 100/oz, with growth capital forecast at A$60-million and exploration spend of A$20-million.

“We are proactively simplifying our operating model with the key being to make our biggest mines bigger and more profitable, as cost inflation disproportionately impacts smaller scale operations. Big Bell, Bluebird and Starlight undergrounds have scale and are increasingly operating at, or above, design production levels. As such, the group’s reliance on more cost-sensitive, smaller tonnage operations is set to diminish, which will provide greater financial upside,” Bramwell said.

“It is a testament to the inherent flexibility of our business that the cessation of openpit mining last quarter and planned operational pauses at the smaller Comet and Fender underground mines this quarter does not materially affect 2023 guidance. Our expenditure will drop as we monetise the large surface stockpiles that we have accumulated over the past year and the reset of our operating model provides the immediate opportunity to redeploy equipment and personnel into our larger, more profitable mines.

“Until the cost landscape stabilises it is prudent to consolidate our production during 2023. Westgold is now structured to do this as we are debt free, and our balance sheet is strong. Critically our growth plans are well funded, and the team is focussed on building a stronger platform from which to achieve long-term growth.”