As Westgold Resources (ASX:WGX) heads towards its $1.3 billion merger with Karora Resources later this year, it is also approaching record revenues of over $700 million for the year ending June 30. This comes despite a drop in annual gold output.

In a second statement to the ASX on Thursday, following news of its first final dividend, the company disclosed it produced 227,237 ounces of gold over the 12 months, at the upper end of the 220,000-230,000 range. This was after producing 52,795 ounces in the June quarter.

However, the full-year figure was nearly 12% lower than the 257,116 ounces produced in 2022-23. Normally, this would disappoint investors, but the surge in gold prices, especially in the second half of the financial year, has mitigated that impact.

(2023-24 production was also below the peak of 270,884 ounces in 2022).

The company faced investor skepticism in April, with shares dropping 13% in a day, when it revealed issues at its Meekatharra operations and significant rainfall across WA's goldfields in the March quarter, prompting a downward revision of guidance from 245,000 to 265,000 ounces.

Typically, this would result in lower earnings estimates, but favorable global gold prices and a weak Australian dollar supported the sector.

As a result, revenue from gold sales for the year is expected to reach around $710 million, up from $654 million in 2022-23. It would have been approximately $100 million higher were it not for the production shortfall due to Meekatharra issues and adverse weather.

Still, the company saw its average Australian gold price rise to $3,493 per ounce in the June quarter, up from $3,137 in March and $3,041 in December 2023.

The average price for 2022-23 was $2,556 per ounce, more than offsetting higher costs, inflation, and issues at Meekatharra and the weather.

The surge in gold prices increased cash and equivalents to $263 million as of June 30, up from $194 million a year earlier, despite substantial project spending.

Westgold confirmed it remains free of fixed forward gold sales contracts and is now fully unhedged following the conclusion of its zero-cost collars at the quarter's end.

CEO Wayne Bramwell noted in Thursday's update, "It is pleasing the business achieved the upper end of our FY24 production guidance, with 227,237 ounces of gold produced during the year."

"Looking ahead, the growth capital invested across our assets in the past year is expected to begin delivering increased production and margin improvements in the second half of FY25 and beyond."

"Our wholly Western Australian gold business will be enhanced upon completion of the merger with Karora at the end of July, subject to conditions precedent."

"The expanded Westgold will offer a unique prospect in the Australian gold sector – an unhedged, well-funded owner-operator fully leveraged to the gold price."

"With an extensive pipeline of organic expansion, development, and exploration opportunities, Westgold will have unparalleled growth potential and offer an unrivaled value proposition to a broader investment market," he predicted.

The company has heavily invested in its Murchison gold mining assets in WA, particularly around the Bluebird-South Junction mines and prospects, which appear to hold significant upside for Westgold.

Over the past three years, while the company has shown interest in acquiring smaller ounces, it has been actively seeking larger opportunities.

Talks with rival Ramelius in late 2023 did not progress, possibly due to financial constraints. Westgold ultimately succeeded with a share and cash offer for Canadian-Australian miner Karora Resources.

(Ramelius is now considering Spartan Resources.)

Upon completion of the merger, Westgold will gain ownership of Karora's Beta Hunt and Higginsville gold mines, located near Westgold's Bluebird/South Junction and Great Fingall mines. Westgold will also acquire the Lakewood gold mill near Kalgoorlie.