This report is an updated version of the report published on 18 March 2025 at 1:09 PM AEDT

Westgold Resources Limited (ASX: WGX)

WGX is a Western Australia-based gold explorer, developer, and miner focused on the Murchison and Southern Goldfields regions. The company holds tenure over more than 3,200 km² and operates underground mines along with processing plants. With a focus on sustainable mining practices, Westgold is committed to maximising the potential of its extensive resource base while contributing to the local economy.

Recommendation Rationale - SELL at AUD 2.955

• Negative Bottomline: Despite a ~72% annual jump in WGX's H1FY25 revenue to AUD 624mn, bottom-line of the company turned negative because of higher cost of sales. The company reported a net loss of AUD 28mn for H1FY25, compared to a net profit of AUD 44mn in H1FY24. Cost of sales jumped by 71% to AUD 498mn in H1FY25 vs AUD 291mn in H1FY24.
• Technical Observation: WGX shares have crossed their R2 as mentioned in the report dated 18 February 2025. Its 14-day Relative Strength Index (RSI) at ~69.35 indicates the stock is approaching overbought zone and may witness retracement soon.
• Overvalued Multiples: On a forward 12-month basis, WGX’s trading multiples such as EV/EBITDA, Price/Earnings Per Share, and Price/Cash Flow are higher than the industry (Metal & Mining) median.
• Gold Price Volatility: Fluctuations in gold prices can directly affect revenue and profitability of WGX. A decline in gold prices could lead to reduced earnings, making it challenging to cover operational costs and meet financial obligations.

WGX Daily Price Chart

Valuation Methodology: EV/Sales Approach (FY June'26E) (Illustrative)

WGX is expected to trade at a slight discount to its peers considering negative bottom-line in H1FY25, downgrading of FY25 production guidance, revised AISC guidance for FY25, lower production at Bluebird-South Junction and Beta Hunt. For conducting valuation, the following peers have been considered: Ramelius Resources Ltd (ASX: RMS), Bellevue Gold Ltd (ASX: BGL), Regis Resources Ltd (ASX: RRL), and others were considered.

Considering that the stock is has crossed its R2, the recent rally in share price, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at current market price of AUD 2.955 (as of 18 March 2025, at 12:33 PM AEDT).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 18 March 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.