Australian gold producer, WestGold Resources Limited’s (ASX: WGX) shares were placed in a trading halt today (25 March 2019) at the request of WGX, pending an announcement regarding offers to acquire the Company’s Higginsville Gold Operation.
As per the company’s request, the trading halt will remain in place until the earlier of commencement of trading on Wednesday, 27 March 2019 and such time as it makes an announcement about the Higginsville Gold Operation.
The company currently owns various operating gold projects which include Higginsville Gold Operation, South Kalgoorlie Operations and Central Murchison Gold Project, all of them located in Western Australia.
During the half-year period ended 31 December 2018, the Higginsville Gold Operations (HGO) continued to underperform as plant issues combined with the harder and low-grade Mt Henry ores impacted output.
The company recently added to its gold hedge book with a further 30,000 ounces at a fixed forward rate of A$1,863.35 per ounce for delivery in April, May and June of 2019. The company is seeking to prudently and opportunistically protect the price it receives for up to 50% of its gold sales in the short-term (12-18 months), disconnecting its operational outcomes from the sentiment-driven volatility in the US$ gold price.
The company’s forward hedge book now totals 160,000 ounces at an average price of A$1,792.46 per ounce and in addition, Westgold’s gold pre-pays arrangement with Citibank continues to reduce by 1,250 ounces per month and today stands at 20,000 ounces.
During the half year period, the company replenished its working capital with placement of a $23.4 Mn and the extension of its gold prepay arrangement with Citibank which provided an immediate $20.85 Mn. Westgold also announced the sale of its Mt Marion Lithium Royalty in a deal that is yet to complete but could raise a further $10-15 million in working capital.
Although financial outcomes showed an accounting loss of $17,784,401, during the half-year period, there has been a substantial increase in consolidated revenue by $52,154,070 in comparison to the prior period due to an increase in production of some 10,720 ounces.
Cash flows used in investing activities totalled $64,265,579, which was lower than $79,499,894 in pcp, reflecting the continuation of the development phase for the Big Bell underground mine.
On 24 December 2018, the company signed a binding term sheet with Doray Minerals Limited (Doray) to buy its Andy Well and Gnaweeda assets which are located 40km north of Meekatharra, subject to satisfactory completion of due diligence.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock last trading at a price of $1.200 with a market capitalisation of ~$466.93 million as on 25 March 2019. The stock has provided a year till date return of 34.08% & also posted returns of 1.69%, 50.00% & 0.42% over the past six months, three & one-months period respectively. It had a 52-week high price of $1.855 with an average volume of ~ 1,269,860.
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