Enhanced scoping study highlights strong early cashflow for Western Gold Resources

• WGR updates Gold Duke scoping study with robust economics at A$4500/oz gold price up to $56.1m undiscounted cash flows
• Significant potential upside highlighted at A$5,500/oz gold price showing the surplus increases to $97.3m
• Company reports almost 26% production increase in gold ounces 
• Low capital start-up cost of $2.6-$2.8m with mining contractor SSH Group (ASX:SSH) providing a deferred payment facility to the company
• Grade control drilling is +50% complete with mining to begin late Q4 2025

Special Report: Western Gold Resources has updated the scoping study for its Gold Duke project in WA, highlighting early cashflow potential thanks to nearby toll treatment options.

Gold Duke spans about 25km of strike length along the Joyners Find Greenstone Belt and has existing mining approvals at the Eagle, Emu, Golden Monarch, Gold King and Joyners Find deposits which contain more than 50% of the project’s resources.

Against a modest market cap of around $38m, the company is now reporting  potential  250%+ increase to the 2024 scoping study at a gold price of A$5500/oz showing $97.3m cash surplus compared to the previous A$2880-3500 price which derived $38.1m cash surplus.

The revised production target is 42,800 oz up from 35,000oz in the previous study which is expected to deliver an estimated undiscounted cash surplus of $56.1m at A$4500/oz – after payment of all working capital costs and pre-mining capital requirements.

That’s a 47% increase on the previous estimate of $38.1m and at a gold price of A$5500/oz that jumps to $97.3m representing more than 250% increase.

It’s a significant step forward with Western Gold Resources (ASX:WGR) now in a strong position to advance the project to production. 

“We deliberately adopted a conservative gold price of A$4,500 per ounce for both pit design and financial modelling — well below the prevailing spot price of over A$5,500 per ounce,” managing director Cullum Winn said.

“Even under this cautious pricing scenario, the revised mine plan shows a 53% increase in ore tonnes and a 26% uplift in contained ounces, resulting in a production target of 686,000 tonnes at 2.1 g/t for 42,800 ounces of gold over a 14-month mine life. 

“These results are highly encouraging. The project is expected to generate an undiscounted cash surplus of approximately A$56.1 million, against a low estimated pre-production capital outlay of just A$2.6 to A$2.8 million.”

More pits promise even more ounces

One notable enhancement in the updated scoping study is the inclusion of additional shallow pits in the Golden Monarch-Gold King saddle area. 

These zones, previously considered uneconomic under earlier study parameters, now contribute positively to the mine plan at the higher gold price.

Their inclusion reflects the sensitivity of near-surface mineralisation to variations in haulage and processing economics, while also enhancing the total pit inventory and strengthening early cash flow potential under the multi-pit mining strategy.

Plus, the Joyners Find North and South Pits have been added to the study, contributing an additional 33,000t at 2.3g/t.

The company also has a binding toll milling agreement in place with Wiluna Mining Corporation (WMC) just 46km from the project .

“With a secure and nearby processing solution now in place, the updated Scoping Study confirms that our mining, haulage, and processing costs are all within the bounds of tendered and agreed pricing — delivering strong confidence in our cost base,” Winn said.

“Our preferred mining contractor SSH Mining (ASX:SSH) has provided a deferred payment facility to fund production in a non-dilutive manner. 

“There are very few near-term development gold projects in Western Australia that offer such a compelling combination of rapid payback, low capital intensity, and robust financial returns and is further reinforced with results suggesting that project economics are robust for a broad range of gold prices, with positive outcomes returned above a gold price of A$3,081 per ounce. 

“Our immediate focus is to commence grade control and infill drilling to elevate resource confidence and advance us toward production readiness. 

“With these critical foundations now secured, Western Gold Resources is firmly positioned to transition into the next phase of development — delivering first gold and creating near-term cash flow for our shareholders.”

To date the 35,000m of grade control drilling is more than 50% complete with mobilisation and mining expected to commence late Q4 2025.

This article was developed in collaboration with Western Gold Resources, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.