The Westgold Resources Ltd (ASX: WGX) share price has climbed another 5% as of lunchtime trading. At the time of writing, shares are changing hands at $3.045 a piece.
Westgold Resources shares have surged over the past week, up 20.4% since last Friday. The share price is 14.47% higher over the year.
The gold miner released its guidance for FY26 yesterday morning. The company expects production of 345k ounces to 385k ounces for the current financial year, a 5.7% to 18% increase from its FY25 production levels.
The company also released its cost guidance for FY26. It is expecting an all-in sustaining cost (AISC) of $2,600 to $2,900 per ounce, compared to $2,666 per ounce in FY25.
Following the announcement, Macquarie Group Ltd (ASX: MQG) wrote a note to investors detailing its latest stance on the stock.
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ASX gold mining stock set to soar
The broker has confirmed its outperform rating on Westgold Resources shares and its 12-month target price of $3.60.
From the share price at the time of writing, that represents a potential upside of another 18.2% for investors.
"No change to our A$3.60/sh target price. Our 50:50 blend of 1.2x NAV and 8x OCF methodology is unchanged," Macquarie said in its note.
The broker explained that Westgold Resources' production guidance of 345-385koz was in line with VA (<5%), but 5% below Macquarie's estimates.
"It includes 15-30koz of third-party ore purchases, with the rest sourced from WGX's own mines. Production is expected to be 2H weighted due to the timing of mine ramp-ups at Bluebird-South Junction, Great Fingall, and ore deliveries from third parties. Guidance is given at the group level and not by individual asset," Macquarie said.
"WGX has guided AISC to A$2,600-2,900/oz (A$2,750 mid), which is in line with both VA/MQe – both at A$2,761/oz. This includes the indicative costs of third-party ore purchases expected over the year."
Softer guided production (mainly third party) for FY26e sees Macquarie's earnings per share (EPS) estimate reduced by 4% for the year.
"Notionally carrying forward the reduced third party ounces into FY27e sees EPS reduce 7%, with <1% changes thereafter," it said.
The broker also notes that movements in commodity prices present a significant upside and downside risk to its earnings forecasts and valuation. Macquarie's stance is also based on assumptions within its forecasts for production, capital expenditure, operating costs, and exchange rates.
