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Key points
- The Westgold share price has been in a sea of red all day
- The gold producer released a positive quarterly update
- The miner achieved record gold production in the quarter
The Westgold Resources Ltd (ASX: WGX) share price has gone underground again today, off the back of an already depressed trading week.
Today's drop also coincides with the company's latest quarterly report and investor update, which has revealed a record amount of gold produced for the quarter.
Despite the positive news, the Westgold share price is down 7.96% trading at $1.83 at the time of writing.
So what's going on with the Western Australian-focused gold miner?
Let's take a look…
What did Westgold report?
Diving straight in, Westgold's business and production results for the period ending 31 December 2021 include:
- A record gold production for the quarter of 66,688 ounces
- Ore production above milling capacity
- Hedges increased to 175,000 ounces at an average of $2,262 per ounce
- Actual gold sales achieved $2,380 per ounce, generating revenue of $195 million
- Closing cash, unsold bullion and liquid assets amounting to $110 million.
The company highlighted several challenges in the quarter:
- Escalation in coronavirus-related costs
- Risk to supply chain on an industry-wide scale — prevented by increasing inventory of "critical spares and consumables" to preserve continuity of operations
- An increase of "labour, fuel, flights and consumables" related costs, raising basic cash costs (C1) to $1,446 per ounce and all-in sustaining cost (AISC) to $1,714 per ounce
Despite the road bumps, the gold miner is confident in maintaining its FY22 production and cost guidance, with total production at 31 December 2021 totalling 132,861 ounces @ C1 of $1,396 per ounce and AISC at $1,648 per ounce.
Westgold added it was "mining more than we can process on a monthly basis" from a number of its sites — Paddy's Flat had a record month, and commercial production is underway at its Bluebird mine.
Comment from management
Westgold executive director Wayne Bramwell said delivering another production record was "an exceptional effort considering persistent labour shortages and costs were further exacerbated this quarter by COVID vaccination deadlines, seasonal absence, and border closures".
Positively, our key mines continued to advance, with Bluebird reaching its steady state production rate, Paddy's Flat achieving a monthly production record and Big Bell continuing to grow in output.
This evidences an increasing number of Westgold's key mines beginning to meet or outperform budgeted production levels, strengthening the capacity of the business to consistently deliver group targets.
Westgold share price snapshot
The Westgold share price has seen a difficult 12 months, dropping 23%. In fact, Westgold was listed as one of the five worst ASX 200 mining shares in 2021, alongside a handful of other gold miners that suffered last year.
Shares in the miner saw their lowest point of the year in September, hitting $1.60 apiece.
Westgold has a market capitalisation of $775.4 million and a price-to-earnings ratio (P/E) of 10.08.
