Thank you for joining our webinar on West Gold's three-year outlook. I'll hand over shortly to our Managing Director and CEO, Wayne Bramwell, who will take us through a brief presentation and we'll take questions after that. If you could please submit your questions via the chat function. Thanks Wayne, over to you.
Thank you Annette and welcome to everyone online. And thank you for joining us today to discuss West Gold's three-year outlook. I'm joined here today by our COO, Aaron Ranken, and CFO, Tommy Hang, who will both be available to answer questions at the end.
Slide four. Let's dive straight in. The three-year outlook is a high-confidence plan and is the first multi-year view West Gold has ever shown the market. It maps out a pathway that sees group production lift from 326,000 ounces delivered in FY25 to 470,000 ounces in FY28. Most critically, it sees our all-in sustaining costs fall over the three-year outlook.
The three-year outlook is underpinned by our FY25 ore reserves only. We announced all reserves of 3.5 million ounces in June this year, which at our FY25 production rate of 326,000 ounces supports 10 years of production from the business.
Fully utilizing our four processing hubs is key to the three-year outlook. Our mills have not been fully utilized over the past few years. Our hubs like Mekathara, our largest mill, have been reliant on low-grade stocks to keep the mill full. Over the three-year outlook, we replace low-grade stocks with high-grade ore. And this is a fundamental change to our operating strategy that will see group mill grades lift and operating margins enhanced.
Slide five. Production lifts and costs fall. It has taken several years to get our mines to a point where mine outputs can match or exceed our milling capacity. This has been achieved by heavy investment in resource drilling into our major assets like the Starlight Underground, Bluebird South Junction, Great Fingal, and Beta Hunt. All of these mines are now beginning to lift their outputs, and that underpins our confidence in the three-year outlook.
The three-year outlook chart shows a material improvement in both production and costs from FY25, where we delivered 326,000 ounces at an Australian dollar all-in sustaining cost of $2,666 an ounce, to 470,000 ounces at circa $2,500 Australian an ounce in FY28. The three-year outlook sees greater than 1.25 million ounces produced and costs falling. Importantly, this growth is organic and is fully funded from our treasury and forecast free cash flow.
Slide six. The three-year outlook is underpinned by June 25 reserves and resources. Key to our confidence in this plan is that 80% of the material mined over the three-year outlook is in reserves.
Slide seven. The last three years has been about drilling our core assets, improving our mine outputs, and investing in our processing plants to make them more reliable. The three-year outlook you're seeing today is all about our processing hubs. It's about building high-grade stockpiles in front of them, optimizing feed blends to increase throughput, and squeezing more out of our smaller mills with incremental capital investment.
Most importantly, it's about expanding Higginsville to circa 2.6 million tonnes per annum to process all of Beta Hunt's expanded output. Having four processing hubs gives West Gold strategic influence across the two goldfields we operate in. Processing infrastructure of scale is extremely valuable and one of West Gold's biggest value drivers.
Slide eight. Keeping our mills full with higher-grade ore will increase free cash flow. Let's dive into each of our processing hubs one by one. Starting with our largest, the Mekathara hub of 1.8 million tonnes per annum. The plan for the three-year outlook really is Bluebird South Junction Underground will expand and will continue to expand conservatively, reaching 1.2 million tonnes in FY28, though we're already approaching those numbers towards the end of this financial year. Great Fingal is the first high-grade stope out of Great Fingal we'll see in FY26, ramping up to a scale of 600,000 tonnes per annum in FY28.
This injects grade into the Murchison business we've not seen, with the expectation of Great Fingal being circa 4 grams per tonne. Another new addition to the Murchison business will be the reactivation of open pits during FY27. Again, the secret sauce to many of our processing hubs is soft oxide ore, and the intent with our own pit program is to build buffer stocks and add softer ore to our hard ore blend.
The Higginsville hub, 1.6 million tonnes per annum currently. Beta infrastructure upgrades will support a 2 million tonne per annum output run rate by the end of H2 FY26. Key point to be noted in the three-year outlook: there is no contribution from the Fletcher zone. 2 million tonnes from Beta Hunt is predicated on two mining fronts: the western zone and the A-zone and the western flanks. In the three-year outlook, there is no Fletcher.
Additional grade into the Higginsville mill is being provided by the Two Boys mine at Higginsville. And over the three-year outlook, we plan to commence the Spargos Underground, a short distance from the Higginsville mill. Currently, the 2.6 million tonne Higginsville expansion study is running and will be complete early in the new year. Construction is planned to commence in FY27, with this construction or the additional throughput available to us during FY27-FY28.
The last two mills we own is the Cue hub and the Fortnum hub. Cue, 1.4 million tonnes per annum of capacity currently, and the Fortnum hub, 900,000 tonnes. Both of these processing plants are currently being optimized. They have ore in front of them and their mines and the mills are well matched.
Slide 11. The three-year outlook is conservative by design and has material upside. There are a summary of initiatives that the West Gold team is actively advancing that could see us outperform the three-year outlook. Those initiatives include further expansion of the Bluebird South Junction underground, improvements in operational performance, specifically in our underground fleet productivity, an expansion of the Higginsville mill to up to or more than 4 million tonnes per annum within that three-year outlook. There is no contribution of coarse gold from Beta Hunt. We see coarse gold, but we've not baked that into the three-year outlook.
An expansion of the Murchison open pit programs in areas like Mekathara. We have 96 old open pits which provide additional opportunity and upside to the three-year outlook. Exploration and resource development conversion. Our team has shown that given the right resources, they can convert resource to reserve. And with $150 million committed over the three-year outlook, we're confident that this team can continue to deliver.
Another opportunity to outperform the three-year outlook is the fact that West Gold has three underground mines in care and maintenance. Paddy's Flat, Comet, South and Triton are all mines which are sitting in care and maintenance, and we're revisiting how we crystallize value from those assets. All or any of those could produce additional ore for some of our processing hubs.
Slide 12. This has been a really short presentation because we're all very keen to get to the questions part. But in closing, I'd just like to say this: the three-year outlook is a high-confidence plan that enhances West Gold's value proposition. It is focused on organic growth that reduces our all-in sustaining cost and sees production lift to circa 470,000 ounces by FY28. It is about creating sustainable value for our shareholders, employees, and stakeholders for the long term. In closing, I would like to pose a question for our online audience: What is the fair value for a 470,000-ounce unhedged Australian gold producer? Thank you for your time today, and I'll open the floor to questions.
If you haven't already, please submit your questions via the chat function and we'll be happy to get to those. We have a question here. Let me just open that up. One moment, please.
We have a question here from Tyson. Tyson is asking, 'When do you expect the 1.8 million tonne per annum Bluebird mill to operate at full utilization? Can you provide an indication of how much is expected from open pits given Bluebird South Junction is now expected to reach 1.2 million tonnes per annum in FY28, previously flagged for end FY26?' I think we'll hand this question over to our COO rather, Aaron Ranken. Aaron.
Yeah, thank you Annette. In short, the Bluebird mill is currently now operating at the 1.8 million tonne per annum run rate as of Q1. The key change in the three-year outlook is the displacement of lower-grade stockpiles in that mill with higher-grade ore feeds. The open pit program will do that, but will take up some of that from FY27. However, we do see opportunity to outperform as well with Bluebird South Junction. So really, optionality is the key in terms of lifting the grade profile of Bluebird.
Aaron, can you just speak to — there's another question there about Bluebird South Junction. To be clear, in the three-year outlook, we're forecasting the underground to hit a 1.2 million tonne per annum run rate by FY28. Just explain the nuance about where we are with Bluebird South Junction today.
Yeah, thank you Wayne. As we have talked to the market, we have been optimizing the mine design of Bluebird South Junction, and there's two key aspects of this. Firstly, is opening up work fronts in South Junction. We've landed on a new mine design which we'll start sharing with the market next quarter. That will open up work areas faster than our current estimates have baked in. And additionally, there's the opportunity for Polar Star to come into the three-year outlook. We've not included that in any of our numbers at this stage, and we're actively pursuing that as an additional mining front.
We're looking — Keith Good, thank you very much. He's got our valuation at $9 billion from your lipstick gods' ears. Keith, we like what you're saying. Question here from Hugo. Hugo says, 'Hi Wayne and team. On costs, as you have provided a breakdown of the production outlook between the hubs, can you please — sorry, the question's gone — can you please provide a rough guide on the all-in sustaining cost across the hubs over the outlook? Then to give some comfort around how achievable the $2,500 per ounce all-in sustaining cost is by FY28, can you please provide some color on what you've assumed around mining and processing costs?' Who would like to take that one?
Let me front-end that one, Hugo, and then Aaron can dovetail on that. What we've been doing in the quarterly is we provide asset breakdown for the northern business, the Murchison, and the all-in sustaining costs for the Southern Goldfields. We don't give it blow-by-blow, particularly in the Murchison whereby we're bringing ore from Cue to Mekathara. So this hub-and-spoke model blends those costs in the north. So a much better way to look at this thing is all-in sustaining costs for the Murchison, all-in sustaining costs for the Southern Goldfields, and in the detail of the quarterlies you can see tons, grade, recovery from each individual mine. So one of the criticisms of West Gold in the past has been so many moving parts, hard to model. We've now set up the scenario whereby you've got all the ingredients to do it mine by mine, but we really focus on all-in sustaining cost of the Murchison versus the Southern Goldfields. Might just hand over the back half of your question about how achievable is the $2,500 all-in sustaining cost to Aaron.
Thank you, Wayne. The simple way I think to look at all-in sustaining costs for the business is we've not assumed any significant improvement in our cost per mining ton. What we're seeing — we've been relatively conservative on that front. What changes the cost profile for the business is the increase in grade mills by filling them with high-grade sources at a relatively stable and conservative mining cost per ton, and the addition of buffer to our processing plants with the mines outperforming and the addition of open pits. So we expect to see far more consistent, stable performance out of our mills at a higher grade. So as — yeah, no real improvements baked in in mining cost per ton, but the lifting grade sees the improvement in our dollars per ounce.
Thank you, Aaron. We have another question here: What is the open pit contribution to the Murchison mills? Wayne.
Thanks for that. Again, I'll just front-end this question with the fact that there is contribution to the Murchison mills from open pits. One contribution which is live and active and baked into the three-year outlook is the ore purchase agreement with New Murchison Gold from the Crown Prince open pit. So that ore is being processed at Mekathara now, and the current mine schedule for that mine is 30,000 tonnes a month, 30 to 50,000 tonnes a month for two years. I'll hand over now to Lee Devlin to speak about the West Gold open pit program which is also included in the three-year outlook.
Yeah, thanks Wayne. Yeah, the West Gold open pit program is one that we're going to start in FY27. And one of the aspects that Wayne tried to initiate for us in creating the three-year outlook was to create a sense of buffer around our mills, which is somewhat novel for West Gold. It also provides a bit more high-grade rather than using up the low-grade stockpiles that we've got floating around. So the open pit program will encompass CGO, MGO, and FGO. So encompass the full Murchison, only a portion of that is going to get taken up in the three-year outlook. So all up, we're looking at over 3 million tonnes worth of material getting mined as part of that program, which will be over a five-year period. So only a short amount of this is captured within the three-year period. So it will provide a small but very valuable ounce profile in terms of the wider Murchison as well, but allows us to create rainy-day stocks that will sit up on the ROM ready for us to process when required.
Thanks very much for that, Lee, and that's very key to the point. You cannot optimize these processing hubs without stockpiles in front of them. Having high-grade stocks in front of these mills or soft oxide material will see throughput increase, typically grade lift, and recoveries lift. All of that adds up to additional ounces.
Thank you. We have a question here from Ry. Ry is asking, 'Have we hedged any of our high-cost inputs like diesel for the duration of the forecast?' We'll hand that one to our CFO, Tommy Hang.
Yep, thank you for the question. Great. No, we don't hedge any of our gold price or our high-cost inputs. Actually, for diesel, our reliance on it will be diminishing hopefully as we embark on more of our clean energy transition.
Thanks, Tommy. We have a question here from Douglas. Douglas is asking, 'When will Spargos underground development be started and what grade can be expected for Spargos?' I'm going to hand that question to our COO, Aaron.
Thank you, Annette. Yeah, Spargos is relatively simple. We'll be starting the development of that in FY27 in our outlook. We're expecting a head grade out of that mine of more than three and a half grams. It's a relatively small contribution in the Southern Goldfields, though. I think it's about — we've got a four-year mine life at about 20,000 tonnes a month coming out of that mine when it's in full production.
Thank you, Aaron. A question from Sky. Sky is asking, 'Can you provide some guidance on economics of mines in care and maintenance?'
Thank you, Sky. It's Wayne here. Paddy's Flat, Comet, South, Triton — we're revisiting all of those assets now. Most of those assets were closed at a gold price of circa $2,500. Today's gold price of $5,800 makes those things a different proposition.
Thank you, Wayne. We have a question from Charles. What are you expecting for the FY2027 production? What can be expected for an average grade for FY27 and 28?
Back to me. I'll take that one. Thank you, Charles. I mean, the chart in the outlook shows 420,000 ounces forecast for FY27. And just seeing the rest of your question — grade. Oh, and grade. What we're seeing in this business, Charles, is that the West Gold business is moving from typically a group mill grade of two grams. It's rapidly moving up past 2.5 towards three grams per tonne. That's what's going to drive the operating margin in this business over the three-year outlook. Putting higher-grade ore through our processing plants generates more ounces and lowers our cost.
Thank you, Wayne. We have a question from David. David's asking, 'What percentage of production does West Gold intend to hold as bullion on the balance sheet versus selling into the market?' I'll hand that one to our CFO, Tommy.
Yep. Thanks for that, Dave. We have no set percentage. As we look at it now, West Gold is not short of its treasury balance and its balance sheet is strong. So I would say on any given month, it really depends on the cycle at the end of the quarter. At the end of the quarter, as and when the month ends and the gold pour happens, dictates what we hold at the end of the month. So really we have no set percentages that we hold.
Thanks, Tommy. And we have a question here from Frank. Frank is asking, could you please provide more details on the cooperation between New Murchison Gold and West Gold, both in the short and the long term? I'll hand that one to our Chief Growth Officer, Simon.
Thank you, Annette. So we have a very strong working relationship with New Murchison under the strategic alliance, which is ongoing. It gives us opportunities for further business relationships. But at Crown Prince itself, the original or the initial ore purchase agreement runs for two years with options to extend that past that point should the resources continue. So we continue to work with New Murchison and look at all sorts of opportunities that come forward from them.
Right. Thanks, Simon. Another question here: What contribution does Crown Prince have for production and all-in sustaining costs, and could life extend into FY28?
