Westgold Resources Ltd

Collins St Value Fund continues to hold Westgold Resources (WGX) due to the company's strong position in the gold market and its positive outlook. With a market cap of $700 million, Westgold is on track to meet its production target of approximately 250,000 ounces of gold for the year, at an all-in cost of about $2,000 per ounce. Given the current gold price of AUD $3,000 per ounce, Westgold is well-positioned to capitalize on favorable market conditions. The company operates in a stable jurisdiction with a growing resource base, comprising over 1,400 employees, four underground mines, and three processing plants. Additionally, Westgold has made significant strides in improving efficiencies, further enhancing its growth prospects. Collins St Value Fund remains optimistic about the company's potential, with confidence in its resource base and growth trajectory over the coming months and years.

L1 Capital Long Short Fund has updated its investment thesis on Westgold Resources Ltd, highlighting strong expectations for production growth, which is forecast to increase from around 250koz to over 300koz ounces in the next few years. Coupled with the attractive A$ Gold price, which remains above A$3,000/koz, L1 Capital Long Short Fund sees the potential for significant free cash flow growth in the coming years. The Fund continues to hold Westgold because of the successful turnaround executed by the company’s new management team, which has demonstrated strong performance over the past year. This solid execution, combined with robust market conditions, reinforces the Fund’s positive outlook for Westgold’s future growth and financial performance.

L1 Capital Long Short Fund has updated its investment thesis on Westgold Resources Ltd, following a strong rally in the company’s share price, driven by the rise in the gold price and a positive Q1 FY24 production update. Westgold’s approval of the Big Bell expansion project, expected to add approximately 93,000 ounces per annum and extend the mine life to 16 years, is a key growth driver. L1 Capital Long Short Fund continues to hold Westgold because it believes the company’s new management team is executing well, with all-in sustaining costs falling substantially and net cash growing to over $200 million. These positive developments, combined with a favorable gold price environment, support the Fund’s continued optimism for Westgold’s future earnings and growth potential.

L1 Capital Long Short Fund continues to hold its position in Westgold Resources despite an 11% decline in shares, driven by a 4% drop in the gold price. While the recent pullback is notable, the Australian dollar gold price remains up by around 32% for the year, which is expected to lead to significant cash flow growth for gold equities. Westgold is undergoing a transformation towards becoming a producer of material scale, with production projected to grow from approximately 230koz in FY24 to over 600koz post-FY26. This growth is driven by a combination of organic development and its merger with Karora, completed in August 2024. The company is also improving its portfolio by focusing on scalable operations and investing in exploration, which should enhance cost efficiency and lead to stronger cash flow generation over time.

L1 Capital Long Short Fund has updated its investment thesis on Westgold Resources Ltd, continuing to hold the position as the company transitions into a materially larger and more efficient gold producer. Following the completion of its merger with Karora Resources in August 2024, Westgold is now positioned to grow annual production from ~230koz in FY24 to over 550koz post-FY26. L1 Capital Long Short Fund highlights that this growth is expected to come from organic expansion across core assets, including the Great Fingall development, the Bluebird South Junction and Polar Star lodes, and the Beta Hunt mine—supported by exploration upside from the Fletcher Zone. The fund sees Westgold’s strategic focus on scaling operations, reducing portfolio complexity, and enhancing asset quality as key drivers of improved cost efficiency and long-term cash flow generation. With a strong net cash balance sheet and significant production growth ahead, L1 Capital Long Short Fund notes that Westgold currently trades on an attractive ~6x P/E (from 2026), well below its ASX-listed gold mining peers, suggesting upside potential as the company executes on its growth strategy.

L1 Capital Long Short Fund continues to hold its position in Westgold Resources, despite a weaker-than-expected Q2 FY25 production result and a reduction in FY25 guidance. The fund remains optimistic about Westgold’s significant growth profile, which is driven by the simultaneous ramp-up of its core assets, Beta Hunt and Bluebird. Although both assets have faced delays due to infrastructure constraints, L1 Capital Long Short Fund believes these issues will be addressed through ongoing investments aimed at improving operational efficiency. The merger with Karora Resources, completed in August 2024, is expected to support Westgold’s path to becoming a producer of over 500,000 ounces annually by FY26. The company is also focused on upgrading its portfolio quality by prioritizing scalable operations, which should enhance its cost structure and generate stronger cash flow over time. Despite the short-term setbacks, L1 Capital Long Short Fund continues to hold because it sees substantial long-term value in Westgold’s growth strategy and its potential to scale efficiently.