Good evening, good afternoon, good morning, depending on where in the world you're tuning in from. It's quite a global audience today, so really appreciate you guys taking the time to spend with us. And today I'm joined by Wayne Bramwell, Managing Director and CEO of Westgold Resources, for a virtual town hall to conclude the calendar year. How are you this morning, Wayne?
I'm doing well, Romeo. How are you?
Good, it's good. I'm well. Now I've got a bit of housekeeping to get into before we get into today's event, so bear with me. First, it's an interactive town hall, so please do submit questions into the live chat in the bottom right of your screen, really at any time during today's event. I've got some questions for Wayne first, many of which were submitted by investors over email, but then we'll get into those live questions before we conclude for the day. If for whatever reason we don't get to your question today, I'm going to go ahead and make sure Wayne and the Westgold team have them and they'll get back to you really as soon as possible. Last thing, today's event is being recorded and will be available for replay in the morning Eastern Time on Wednesday. Without further ado, I'd love to get into the meat of today's event. So Wayne, I'm just going to grill you for a bit if you don't mind.
Don't have to ask twice, Romeo. Let's go. Come on.
Perfect, perfect. I'm ready. So this is the first one. The Bluebird South Junction area has shown, to my eyes, impressive resource and reserve growth. I'm curious if you could walk us through key findings from your last series of drilling campaigns and how this fits into the broad Merrieslie strategy.
Look, it's been a big year for the Bluebird South Junction mine and that system. We've added more than a million ounces to that mine in the last 12 months, and that's been a function of continually drilling it for the last two years. We've had four to five drill rigs sitting on that mine, inside that mine and on the surface, drilling it for 18 months, and that's culminated in a big resource and reserve upgrade this year, which has added a million ounces to resource.
That's great. In the same vein, the Starlight resource upgrade is significant news for shareholders. So I'm curious, what are the next steps in developing that asset and how does it complement other existing operations in the region?
Great question. I'm actually at the Fortnum mine today, or the Fortnum operation, which is the home of the Starlight underground. We're really happy in terms of, again, this is an ore body that has been under-drilled forever, like Bluebird South Junction. We've been drilling this mine now solidly with between two and four rigs for the last 18 months, and that's resulted in a massive resource and reserve upgrade. Yesterday we announced the output of a scoping study into the expansion of the Fortnum mine, which has only been capable because of the drilling we did to expand the Starlight resource. So, you know, this across the whole company in the last two years, we've really committed to drilling, and we're starting to see the benefits of that investment across all the assets. Bluebird South Junction growth extending mine life, Starlight growth extending mine life, all of these things are giving the business a much longer planning horizon, more data, a much longer planning horizon, and allowing us to take far more strategic decisions about how we expand these mines to drive our costs down.
That's great. It's always good when drilling pays off. Good to see. With Great Fingal development tracking ahead of schedule, what are the key milestones that investors in the room here today should watch for next year?
Look, we will do a Great Fingal update early in the new year. I mean, again, the decline is well advanced. I mean, under the current schedule, likely to pull first stopes in Q4 of this FY25, so the middle of calendar 25. But there are some early opportunities there, and we'll speak to that in a sort of a project update early in the new year. But this mine, for those who don't know, is something we're really proud of. It's a historic mine. We've been in there redeveloping, pushing on a new decline or ramp for 18 months now. And what it does for Westgold as a business, it brings tonnage and grade. You know, this mine at steady state will do 40,000 tons a month, but we're expecting to be able to mine this ore body at close to five grams per ton grade.
And moving to Big Bell, operational enhancements there have shown pretty promising results in terms of volume. I'm curious if you could elaborate on what specific improvements were implemented and how they impacted that productivity.
Look, before the merger with Kora, our Big Bell mine was the number one asset in the business, and it was our biggest mine. It was doing anywhere between 1 to 1.1 million tons per annum a year. And again, prior to the merger, we'd planned on expanding this mine. Well, post the merger, I mean, we've now got a much larger asset package. We've decided that we're already expanding Beta Hunt, we're expanding Bluebird South Junction. Trying to activate the expansion of Big Bell, trying to do three things at once was poorly timed. So we're basically where that mine's at now, it's very much focused on delivering 80 to 100,000 tons of production a month. We're optimizing the cost base there, so we will expand that mine, just not at the moment. At the moment, the real priorities are around Beta Hunt and Bluebird South Junction. So long story short, trying to do too much with too few people always ends up in the same place. Our priority is really to get Beta Hunt up to above 2 million tons per annum, Bluebird South Junction to above 1 to 1.2 million tons per annum, and then we'll start to look at the potential expansion of Bluebird if the returns and the economics make sense.
Great, no, appreciate that extra context. I know there's been considerable interest in the Fletcher Zone and Higginsville drilling programs. I get emails, so I'm curious what potential do you see in those areas and how do you see them contributing to Westgold's growth?
The Fletcher Zone at Beta Hunt was one of our main attractions in actually talking to Kora about this potential merger. As we sit here today, I mean, some months ago we released an exploration target for the Fletcher Zone, which we told the market that our view as an exploration target across this two-kilometer long strike that Kora had drilled was a potential of 1.6 to 2.2 million ounces. What we told the market at that point, which was I think September now, shortly after we'd merged with Kora, was that we were going to focus on drilling the lower one kilometer of this target with the view of trying to define or deliver a maiden resource in the March quarter of next year. As we sit here today, we've got four rigs, I think, operating at Fletcher, belting the hell out of this zone, getting more data and more core with the view that we will deliver this maiden resource in the March quarter next year. That will really, in our mind, crystallize a lot of things. I mean, we think Fletcher is a repeat of the Western Flank Zone, and if what we believe is true, being able to deliver a large maiden resource in the March quarter will then trigger a lot of other expansion opportunities.
No, that's great. I'm going to move, if you don't mind, to the recent ore purchase agreement with New Merrieslie. It's an interesting development. I'm curious if you could explain to the folks in the room what your asset optimization strategy is and how arrangements like this are creating value for shareholders.
It's a really good question, Romeo. We did this deal with what a company called Aura Gold, it's changed its name now to New Merrieslie Gold, and this in some sense is quite, I think, a really smart commercial model for both groups of shareholders around the processing plants that Westgold owns now, which we have five. There are a lot of small explorers who have mineral resources but no processing solution. Trying to build processing plants in anyone's country now is a costly and slow process. So we've gone to the explorers who sit around us and go, hey, here's a good idea. If you want to mine this ore body, don't go and build a new processing plant. That's a really inefficient use of capital. Let's do a commercial deal which can leverage our costs and our capital and end up with a scenario whereby if you want to mine, you can mine. We'll buy the ore under an ore purchase agreement and process it at our processing plant. Simplistically, I think this is a really capital-efficient way of developing new projects because some of these smaller cap companies, explorers, the ability to raise equity or debt to build these projects is really hard. I mean, we, through our scale, don't have those issues. We've got cash, we've got debt, we've got processing capital. So if these groups can all work together for the greater good, or for the greater good of two groups of shareholders, I think it's just good business. So the deal that we've done with New Merrieslie Gold, I think, is really positive for the New Merrieslie shareholders and for Westgold because we now have got access to open pit ore from the Crown Prince deposit, which, you know, we think that New Merrieslie can mine at close to three grams per ton. That source of soft oxide material, which we don't have currently in our own package or don't have currently defined, gives us the ability to increase the throughput in our Bluebird processing plant and generate more ounces. So simplistically, Westgold is really interested in making smart business decisions, and if we can help other people monetize their assets by utilizing our capital base, everyone's a winner.
Yeah, great. One question I always like to ask this, when companies have expanded significantly, as I know Westgold has, how you've managed to maintain and strengthen your safety culture while you're integrating new assets and team members at the same time.
That is a fantastic question. I mean, the safety culture has been one of the key things which have changed in Westgold over the last few years, and it's really clear. It's a really simple model. If we get the safety culture right in these mines, productivity follows. Poor safety culture, you very much struggle to generate good production and good outcomes. So how do we maintain this? Certainly in the merger with Kora, what we did, we deployed a lot of our own safety people and our safety systems into the Beta Hunt and Higginsville operations, and we were really lucky. The workforce there could see that our systems were more advanced than theirs, and that, you know, they were very receptive to adopting our systems and our processes. The Kora teams were doing really well, but were also short-staffed and poorly resourced. So for us to be able to bring people and systems which they didn't have to recreate was welcome in their operations. How do we maintain that rage? We basically are continually educating our workforce about safe and profitable ounces, and that really, we are guided by our principles here, which our values are really simple: choose safety, show respect, create value. Really, safety is where it starts. If you don't choose safety, that is something, or you're prepared to take shortcuts in our business, these are the things we won't stand by, and those people don't end up staying with Westgold very long, Romeo. Which, look, in some sense, that is where it stops and starts. If we can't do it safely, we're not doing it, and for people that don't want to do it safely, this is not the place for them.
That's a good rule of thumb. While we're on talent acquisition, I know it is a traditionally pretty competitive labor market, so I'm curious what, in your opinion, makes Westgold kind of an employer of choice for folks who are looking for work?
Look, some context for the North American investors here. You know, certainly in Western Australia, where we operate, labor has been in short supply. Even six months ago, 12 months ago, all the mine operators were, you know, post-COVID, were struggling to maintain the workforces and had, you know, much higher turnover. In the last 12 months, the sort of the wind back, or in some sense, the collapse of the nickel industry, the slowdown in the lithium space, and also some headcount reduction in the iron ore world has meant there's been a greater supply of staff into the West Australian market, which has really removed a lot of these labor pressures. How do we maintain the talent, or how do we retain the talent we've got and acquire new talent? Well, I guess we're upfront about our values, about the things we stand by and the behaviors that we won't stand by. We're also, I think, as a business, pretty open and honest about how we roll. I mean, we're a little different than some of our peers where we are owner-operators, which is really common in North America, not so common in Australia, where we mine the ore body that we own with our own people and our own equipment. That's an appeal to a lot of people. I think Westgold, too, you know, it's the fact that we've shown both our staff and the market that we're prepared to invest in drilling to extend these mine lives is showing a different phase of the business. Certainly, Westgold is starting to evolve, and I think we're pretty clear about, we're getting better, I should say, about how we communicate about what we stand for, what our aspirations are, and I think that's a pretty strong pitch or employee value proposition. Look, we're still getting better at that. I mean, this business is not for everyone, but, you know, I think we're getting a, I know we're on the right path because we are getting far, you know, the amount of, the quality of the resumes that come to us now, there are people who want to join this business because they like what we're doing, and that's really the proof in the pudding. If people want to join this business because they like what they see, I mean, that's the best, that's the best client reference that I can see.
That's good to hear. One investor wrote in asking if you're going to be coming to Canada and the United States to promote Westgold in the coming year.
Sure, 100%. Myself and the Chief Growth Officer in the US and Canada in September. We'll be back for PDAC. And for those in North America, I'm at Fortnum today. It's 42 degrees C. So being in Toronto in February, which in Perth is maybe in the 30s, and there's all this white stuff in Toronto on the ground, which in West Australia I don't really understand. But look, we'll be back, and we'll be back regularly. Snow and being in Toronto in North America in the winter is just something we have to deal with now.
There you go. I'll be coming from Mexico to see you at PDAC in the snow and the slush, so I'll see you there.
Just as a West Australian, we're not, I'm not really equipped for snow, but it's something which we're getting more comfortable with. You do sort of get used to it.
Somebody asked how soon do we expect to be able to show improvements in margins?
Yeah, no, great question. I mean, the post-merger, I mean, we closed the deal with Kora on August the first, and the messaging to the market was, look, it's going to take us a half, two quarters to start to stabilize and start to optimize the business. So certainly in our financial year Q3, the March quarter, when you'll start to see our costs really start to fall and margins escalate.
Great. Somebody wanted to know if you think you'll be exploring Lake Cowan and the Sleuth Trend sooner rather than later.
Answer to that is sooner. We're drilling a Lake Cowan target as we speak. So yes, that was one of the other appeals of the Kora assets was really the Higginsville package and how little had been done, even though Westgold had previously owned that area long before I was in the company. I mean, as a fresh set of eyes, we could see, wow, there is significant greenfields opportunities down there. So happy to say, I think at the moment we've got three rigs running in the Higginsville area. Certainly the Lake Cowan target was one of the earliest ones we've started. Vine, which is a target very close to the Higginsville mill, is being tested as we speak. And we've also got a drill rig underground at Two Boys. So we told the market we were going to start drilling quickly at Higginsville. We're doing that.
That sounds like a sooner rather than a later. Great. One person wrote in, and this is reflected also by one of the questions in the chat, so we'll try to tackle both at once. They write in saying it looks like they're still being hit with short sellers who don't own the stock. What's being done to fight against naked short selling? And then somebody in the chat asks, is there consideration of share buybacks to knock down shorts?
Look, we look at the short position, and look, there was a lot of short in the stock during the merger, as would be expected, but the short position in this stock now is very, very small. So now it's not something which we see as driving the share price at all.
Great, I appreciate that. Somebody noted in the chat that you just mentioned you'd be mining at three grams a ton, and he says that the inferred resource is 3.9 grams a ton, so he's curious where that discrepancy comes from. Is that for which ore body? Is this for Bluebird South Junction, I believe?
Yeah, and look, I say three on a bad day at Bluebird South Junction, it's sort of 3 to 3.5, and when we mine it clean and really well, that number is north of four. So, you know, don't be, I won't round this to two decimal points, and mining is not that precise.
