Monsters of Rock: Westgold finally posts maiden dividend, FMG shines and lithium players spike
Link copied to
Westgold Resources (ASX:WGX) split the gold business off tin miner Metals X (ASX:MLX) almost five years ago at $1.70 a share and since then it’s been much of a muchness, with the $740 million capped gold miner trading at $1.75 today.
But there is reason for shareholders to cheer now as the Mid West focused mid tier gold miner rewarded long-term holders with its maiden dividend.
The unfranked 2c a share payout came as Westgold posted a record profit after tax of $76.8 million, 122% higher than this time last year.
Justification finally for the long-term process the Peter Cook chaired gold miner has followed to reconfigure its asset base, selling its older mines around Kalgoorlie to Northern Star Resources (ASX:NST) and Canada’s Karora Resources so it can focus on the historic Cue and Meekatharra gold fields.
It is also lends credence to the confused frustration of gold bugs who have seen gold companies like Westgold lose 30% of their value (WGX shares touched a high of $2.80 around this time last year) at a time of record profitability for their investments.
Westgold’s success in FY21 was driven by higher prices realised for gold sales, with revenue increasing 16% from $492.3m to $571.2m despite ounces sold only rising by 4% from 235,196oz to 245,066oz.
Costs were also down marginally, with cash in hand at the end of the year increasing from $137.6m in 2020 to $150.7m in 2021.
Westgold loves a nod to the past and recently reopened Triton, one of the first mines opened by Western Mining Corporation in its early days as a gold miner before the legendary Australian mining company discovered nickel in Kambalda.
With 2.5Moz in reserves and 8.5Moz in resources, Westgold plans to ramp up to 270,000ozpa from the coming financial year.
Westgold shares were up 2.76%, but that was par for the course on a superlative day for miners, with the Materials index gaining 2.93% against the backdrop of rising gold and iron ore prices.
All of the big iron ore players saw their shares run hot with prices tip-toeing back in the direction of US$160/t late last week after a precipitous fall in the weeks prior.
Fortescue’s earnings in the 2021 financial year were, while expected, out of this world, more than doubling its profits to US$10.3 billion.
FMG will pay a $2.11 final dividend, worth about $2.35 billion to its founder, chairman and top shareholder Andrew Forrest, taking its total payout for 2021 to $11 billion, about $4b of which is due to Twiggy.
Only South32 (ASX:S32) and big lithium stocks Pilbara Minerals and Orocobre – now an amalgam of the Argentine brine producer and Australian hard rock miner Galaxy Resources to be renamed Allkem – could compete with FMG as today’s big winners.
Pilbara set the lithium market alight by selling a 10,000t package of spodumene for US$1250/t on its self-owned Battery Material Exchange last month.
That’s around three times prices seen when the market bottomed out last year and roughly US$300/t above current index prices. All that and Pilbara MD Ken Brinsden says the product sold was basically the dregs from its Pilgangoora mine.
Another sale is coming up and the market insiders are suggesting prices could be even higher.
Bullish vibes persisting in #lithium market. Up across the board. A trader told @Fastmarkets they believe the next Pilbara Minerals spodumene auction price (due 3rd week Sep) “will definitely higher than the last one,” and that it might be possible for bids to reach $1,400/t pic.twitter.com/JdfMj8N5fp
— Peter Hannah (@PHmetals) August 27, 2021