WGX’s 2QFY25 result was disappointing, with production of 80.9koz 18% lower than we had expected. Ground instability at Bluebird-South Junction and ventilation and water pumping limitations at Beta Hunt were the primary drivers behind the softer result, all of which are expected to be resolved over the next few months. The ramp up of the high-grade Great Fingal mine was also slower than we expected, with material ounces not expected until the 4QFY25. Cash flow was marginally negative during the period, with the ~$49m rise in cash to A$152m boosted by a A$50m debt drawdown. We have lowered our FY25 production forecast by 3% to 385koz, noting that our forecast has fallen further below WGX’s FY25 production guidance range of 400-420koz. Cash flow generation should start to improve significantly from this point, and we reiterate our BUY rating on WGX, noting that the stock is trading on an FY26 free cash flow yield of ~20%.
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