Westgold’s Revenue Surges 72% Amid Strategic Investments and Acquisition Costs

Robust Revenue Growth Driven by Acquisition and Market Conditions

Westgold Resources Limited has delivered a strong financial performance for the first half of fiscal year 2025, reporting a 72% increase in revenue to $624 million compared to the prior corresponding period. This surge was primarily fueled by a 29.4% rise in gold production to 158,255 ounces and a significantly higher average gold price of $3,910 per ounce, up from $2,963 in H1 FY24.

The boost in production largely stems from Westgold's strategic acquisition of Karora Resources, which contributed five months of output from the Southern Goldfields region. This merger has not only expanded Westgold’s asset base but also secured its position among Australia’s top five gold producers, as noted by CEO Wayne Bramwell.

Profitability Impacted by One-Off Acquisition Costs

Despite the impressive revenue growth, Westgold reported a net loss after tax of $27.6 million for the half-year. This loss was driven by $84 million in one-off acquisition-related costs, including stamp duty and transaction expenses, which significantly weighed on profitability. These costs were largely non-deductible for tax purposes, resulting in an elevated tax expense that further impacted the bottom line.

Excluding these one-off charges, the company’s normalized profit before tax stood at a healthy $89 million, reflecting the underlying strength of its operations. EBITDA remained solid at $140 million, with a competitive margin of 22%, underscoring operational efficiency despite the integration challenges post-merger.

Rising Costs and Investment Focus

Westgold’s all-in sustaining cost (AISC) per ounce increased to $2,562, up from $2,093 in the previous year. This rise was attributed to lower-than-expected production from key mines such as Bluebird-South Junction and Beta Hunt, combined with the higher operating costs of the newly acquired Southern Goldfields assets. Management anticipates a reduction in AISC in the second half of FY25 as production ramps up and cost optimization initiatives take effect.

The company significantly ramped up its capital expenditure, investing $257 million in acquisitions, mine development, and exploration, more than doubling the prior year’s spend. This aggressive investment strategy aims to build a robust asset base capable of delivering consistent production growth and long-term sustainability.

Dividend Policy and Outlook

Reflecting its focus on reinvestment and balance sheet strength, Westgold’s board has elected not to pay an interim dividend for H1 FY25, suspending the 1 cent per share unfranked dividend paid in the prior period. The company maintains its policy to pay a minimum annual dividend of 1 cent per share, targeting up to 30% of free cash flow, signaling a balanced approach between rewarding shareholders and funding growth.

Looking ahead, Westgold’s management is optimistic that the substantial capital deployed this half will begin to yield returns in the second half of FY25, with expectations of increased production and improved cash generation. The integration of Karora’s assets and ongoing operational improvements will be critical to sustaining momentum.