Westgold share price tumbles 17% as profits reverse in FY22

Westgold shares are having another day to forget.

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Key points

  • Westgold has reported its full-year FY22 results 
  • No final dividend was declared 
  • The company took a "conservative" approach to FY23 guidance 

The Westgold Resources Ltd (ASX: WGX) share price is on the skids today after the ASX gold miner released its FY22 results.

The Westgold share price opened 6% lower this morning and has only extended its losses since. At the time of writing, Westgold shares have tumbled 16.74% to 97 cents.

Westgold share price loses its shine as dividends disappear

Here are the headline results from Westgold's FY22 report:

  • Full-year record gold production of 270,884 ounces (oz) – up 10% from 245,411oz in FY21
  • All-in sustaining cost (AISC) came in at $1,692/oz – up from $1,411/oz in the prior year
  • Achieved gold price of $2,401/oz – up from $2,330/oz in FY21
  • Revenue grew by 13% to $647.6 million
  • EBITDA decreased by 17% to $209.2 million
  • Net loss after tax of $111.1 million, reversing FY21's profit of $76.8 million
  • No final dividend was declared

What else did Westgold report?

Included in Westgold's FY22 results is a non-cash impairment charge of $175 million, which weighed on the company's bottom line. This impairment charge relates to the Big Bell, South Emu Triton, Starlight, and Open Pits mines.

The company also battled supply chain and inflationary cost pressures during the year. Diesel fuel prices increased by 106% while other major consumables experienced material changes. This included reagents, grinding balls, ground support, flights, haulage services, and freight.

Excluding lease liabilities, Westgold ended the financial year debt free. The company's $100 million placement in March this year helped the company to boost its cash reserves to $183 million.

The placement price was set at $2.11, with the Westgold share price halving in the period since.

What did management say?

Commenting on the results, Westgold's managing director Wayne Bramwell sounded upbeat, saying:

FY22 was a year of major, but successful, transition for Westgold as we delivered on our production guidance to achieve a record result of 270,884oz. 

We made significant strides in resetting and enhancing our operational base despite the challenging macro environment.

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.

What's next?

The company noted it is taking a "conservative" approach to FY23 guidance, providing the following outlook:

  • Production between 240,000oz and 260,000oz – down from 270,884oz in FY22
  • AISC between $1,900/oz and $2,100/oz – up from $1,692 in FY22
  • Growth capital of $60 million
  • Exploration capital of $20 million

Westgold share price snapshot

Westgold had already previously flagged the impairment charge to the market, and its quarterly production reports provided a preview of the results.

So, it's likely that the company's guidance is what's weighing on the Westgold share price today.

This only adds to Westgold's dismal run on the ASX this year. The Westgold share price has suffered a steep 52% fall since the beginning of 2022.

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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