Westgold’s Profit Plunge Highlights Risks Behind Its Transformative Merger
Westgold Resources reports a transformative FY25 with record revenue and EBITDA following its merger, while navigating one-off costs and boosting dividends.
- 90% revenue surge to $1.36 billion driven by Southern Goldfields acquisition
- Adjusted EBITDA climbs 84% to $498 million with strong operational margins
- NPAT declines 63% to $35 million due to one-off merger-related expenses
- Record gold production of 326,000 ounces achieved
- Dividend increased by 33% and a share buy-back program initiated
A Transformative Year for Westgold
Westgold Resources Limited has delivered a landmark financial performance for the fiscal year ended June 30, 2025, propelled by its strategic merger with Karora Resources and the integration of the Southern Goldfields assets. The company’s revenue nearly doubled, soaring 90% to $1.36 billion, while adjusted EBITDA surged 84% to $498 million, underscoring the operational scale and efficiency gains from the expanded portfolio.
CEO Wayne Bramwell highlighted the year as transformative, emphasizing the doubling of operational scale and record gold production of 326,000 ounces. This production leap was largely driven by the Southern Goldfields acquisition, which contributed 129,000 ounces alone. The company maintained full exposure to elevated gold prices, which averaged $4,387 per ounce, further boosting top-line growth.
Profitability and Cash Flow – A Mixed Picture
Despite these impressive operational metrics, Westgold’s net profit after tax (NPAT) fell sharply by 63% to $35 million. This decline was primarily due to one-off transaction costs associated with the merger, increased depreciation from the larger asset base, and higher income tax expenses. The company also recorded a gain on the disposal of the Lakewood asset, partially offsetting these impacts.
Underlying free cash flow doubled to $224 million, reflecting strong cash generation from operations and disciplined capital management. Westgold ended the year with a robust balance sheet, holding $364 million in cash, bullion, and liquid investments, alongside an undrawn $250 million credit facility, providing ample liquidity for future growth or shareholder returns.
Rewarding Shareholders Amid Growth
In a clear signal of confidence, Westgold increased its dividend by 33% to 3 cents per share and announced an on-market share buy-back program. These moves suggest management’s commitment to returning value to shareholders while leveraging the company’s strengthened financial position.
Operationally, the company improved its EBITDA margin to a competitive 36%, with EBITDA per ounce rising 28% to $1,526, indicating enhanced profitability and efficiency. However, the elevated all-in sustaining cost (AISC) of $2,688 per ounce for Q4 production, including unsold bullion valued at $96 million, will be an area to watch as the company seeks to maintain margins amid fluctuating gold prices.
Looking Ahead
Westgold’s FY25 results mark a pivotal step in its growth trajectory, but the full benefits of the merger and asset integration will unfold over the coming years. Investors will be keen to see how the company manages ongoing costs, capital allocation, and market volatility to sustain its momentum and deliver on shareholder expectations.
Bottom Line?
Westgold’s record operational scale and cash flow set the stage for growth, but merger costs and market dynamics will test its resilience.
Questions in the middle?
- How will Westgold manage ongoing costs and integration challenges post-merger?
- What is the outlook for gold prices and their impact on Westgold’s margins?
- How aggressively will the company pursue share buy-backs and dividend growth?
