Shares in Westgold Resources Ltd (ASX: WGX) are trading higher after the company pulled the trigger on a $145 million expansion of its Higginsville processing hub in Western Australia.
The company said in a statement to the ASX that the decision followed a definitive feasibility study on the plan, and it marked a major step towards the company's strategy to enhance cash flow by increasing production and reducing operating costs.
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Production up and costs down
The Higginsville expansion project will increase Westgold's Southern Goldfields gold production by about 60,000 ounces per year, and reduce processing costs by 24% to $34 per tonne of ore.
Westgold said the expansion had a pre-tax payback period of 21 months at a gold price of $4905, or just 12 months if the current spot gold price was used.
The expansion includes a new primary crusher, a new mill, a pebble crusher, and additional leaching tanks to take processing capacity to 2.6 million tonnes of ore per year, up 62.5%.
The new infrastructure would also support future expansion to 4 million tonnes of ore per year, the company said.
Westgold Managing Director Wayne Branwell said the expansion made sense.
The Higginsville Expansion Plan (HXP) is the next step to drive down unit costs and increase group free cash flow from the Southern Goldfields. By expanding the Higginsville mill capacity to a nominal 2.6Mtpa we are creating a more productive, lower-cost processing hub to match the growing outputs from our Beta Hunt mine. This will see us deliver higher group gold production at a lower cost, in line with our 3-Year Outlook.
Mr Bramwell said the definitive feasibility study showed the expansion plan was robust, but importantly, it was designed with the future in mind.
Strategically, the HXP has been designed with future growth in mind. While nameplate capacity of the enhanced flowsheet stands at 2.6Mtpa, many of the upgrades within the flowsheet such as the ore conveying systems, jaw crusher and SAG mill apron feeder are designed to support further expansion to 4Mtpa. This ensures milling capacity is not an impediment to future mine expansions at prospects such as the Fletcher and Mason Zones at Beta Hunt. With the study complete and final investment decision approved, our focus now shifts to securing long-lead items, progressing EPC tendering and maintaining operational continuity throughout the build. The timing of the HXP aligns strategically with the anticipated growth in mining rates from the Southern Goldfields, ensuring that expanded processing capacity is ready to accommodate increased ore delivery from Beta Hunt.
The current expansion plans are expected to boost production from mid-2028.
Westgold Resources shares were 4.2% higher in early trade at $6.50. The company was valued at $5.91 billion at the close of trade on Monday.
