Westgold’s JQ result demonstrated the strongest cash generating quarter by WGX since listing on the ASX, with two consecutive cash positive quarters unseen since 2017. The hub and spoke operations, previously dialled back, are looking to expand with the re-start of the Great Fingall and Fender mines, and the expansion of Bluebird and Big Bell. We initiate coverage on Westgold with a Speculative Buy recommendation and valuation of $1.81 at our assumed long-term A$2714/oz gold price, while also highlighting a spot valuation of $2.42. We note the soon to be unhedged gold exposure and potential upside to the operations. We look for continued positive operational cash flow and increases in mine plan certainty through this investment phase, which, if WGX gets right, may catch some by surprise. To look further afield, we are interested in what organic (or inorganic) options WGX may implement to provide longer term feed to the Murchison mills.
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