Australian (ASX) Stock Market Forum

RRL - Regis Resources

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Oh the drama, or should I say melodrama. No doubt mgt have made some poor decisions but the outlook seems much better now. Hedge book closed, wet weather hasn't hindered RRL production like some of the other miners, guidance confirmed.

Even the chart looks better. Put a smile on your dial and wait for the break-out above 2.40.

rrl5.PNG
 
May 24 update: RRL continues to show its weakness amongst unhedged gold producers. Regis seems confident that it can expand its underground production to complement its surface production. IMO the market isn't so sure.

The BO > 2.50 seems a long way away.
 
June 2024 update: RRL continues to be one of the weaker gold mining stocks on the ASX. Price falling further than most.

RRL continues to increase MRE. Production guidance is confirmed and Regis is confident in its ability to open further underground mines in its Duketon and Tropicana underground projects. Additional exploration looks promising.

South32 is litagating it's claim of 1.5% royalty payment from the Tropicana mine that it sold to IGO who then sold it to RRL.
RRL says "no way Jose" does it owe any royalty to S32.
 
Fwiw
Broker moves following RRL's Q4 reporting:
  • Regis Resources Raised to Neutral at Citi; PT A$1.90
  • Regis Resources Raised to Buy at Argonaut Securities; PT A$2.40
Held
Definitely a potential sell at a much higher price.
 
Regis hit guidance for 2024, announcing it had delivered ~418koz from its Duketon and 30% owned Tropicana mines.

Comments by Josh Chiat (Stockhead)

Regis has plenty of concerns when it comes to future growth. The low grade Duketon is getting older and deeper, while an over the top estimate for capex at its McPhillamy’s project in New South Wales, long assumed to be its long-term growth lever, has put the cat quite violently among the pigeons.

But a decision to clear hedges ahead of a run up in gold prices to record highs this year paid off. Helped by a $20m tax refund, RRL banked $109m in the June quarter, leading its cash and bullion account to a record $295m on June 30.

RBC’s Alex Barkley, who has an outperform rating and $3.10 price target on the gold producer, said the company was now close to being in a neutral gearing position with $300m of debt on the books.

The results came with a caveat that heavy rain in WA’s Goldfields hammered Tropicana earlier in 2024.

“Q4 gold production of 106.4koz was in-line with consensus at 106koz, RBC was higher at 114koz not having adjusted our estimates lower for slower rainfall recovery,” Barkley said in a note.

“Weather issues at Tropicana, and a potential miss at the closing Duketon North operation, reduce any potential negative read-through in today’s result.”

So it's unhedged but still carrying significant debt while developing McPhillamy's project NSW. These comments help explain why insto's have been reluctant to invest in RRL and it's been one of the weakest (RSC) gold miners on the ASX.

Prices have formed a reversal pattern off the recent lows and rallying with the rising gold price.
 
peter2 said:
Regis hit guidance for 2024, announcing it had delivered ~418koz from its Duketon and 30% owned Tropicana mines.

Comments by Josh Chiat (Stockhead)

Regis has plenty of concerns when it comes to future growth. The low grade Duketon is getting older and deeper, while an over the top estimate for capex at its McPhillamy’s project in New South Wales, long assumed to be its long-term growth lever, has put the cat quite violently among the pigeons.

But a decision to clear hedges ahead of a run up in gold prices to record highs this year paid off. Helped by a $20m tax refund, RRL banked $109m in the June quarter, leading its cash and bullion account to a record $295m on June 30.

RBC’s Alex Barkley, who has an outperform rating and $3.10 price target on the gold producer, said the company was now close to being in a neutral gearing position with $300m of debt on the books.

The results came with a caveat that heavy rain in WA’s Goldfields hammered Tropicana earlier in 2024.

“Q4 gold production of 106.4koz was in-line with consensus at 106koz, RBC was higher at 114koz not having adjusted our estimates lower for slower rainfall recovery,” Barkley said in a note.

“Weather issues at Tropicana, and a potential miss at the closing Duketon North operation, reduce any potential negative read-through in today’s result.”

So it's unhedged but still carrying significant debt while developing McPhillamy's project NSW. These comments help explain why insto's have been reluctant to invest in RRL and it's been one of the weakest (RSC) gold miners on the ASX.

Prices have formed a reversal pattern off the recent lows and rallying with the rising gold price.
Click to expand...
It's a great looking chart making a great base , just need to break $2.40 , one of my Buy stocks late June and has run nicely thus far , Seen a couple broker upgrades recently so change in fortune is beginning




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Greg Canavan on fat tail investment advisory today. I agree with him fwiw but have not decided to SELL yet as I am an optimist on the gold price 'medium term'. As he says himself, outside this excerpt, at an A$4,000/oz gold price it's probably a hold. Also unquoted is his opinion that the recent DFS for McPhillamys is uninspiring and costed at a billion dollars.

Held
Vacillating
------

Time to turf this low quality producer

"I’ve said for a few weeks now that I wanted to look at Regis Resources’ [ASX:RRL] quarterly report before making a definitive call on it.

Here’s the TLDR version: It’s a sell.

If you’re interested in knowing why it’s a sell, read on…

It’s important that you do because there is certainly potential for the share price to rally from here. I just think it’s a low-probability outcome.

Here’s the problem: RRL is a high-cost producer that must reinvest a good chunk of its cashflows to maintain production. It calls this reinvestment ‘growth capital’, but it’s actually maintenance capital spending.

Despite this investment, it can’t maintain — let alone grow — production.

It released guidance for FY25 last week and, at best, production will come in at 380,000 ounces. That’s down from 415,000 ounces in FY24. At the upper end of guidance, costs will be $2,740 per ounce, representing a 20% increase on FY24.

There are around $150/oz of non-cash charges in those costs. Adjusting for that gives $2,590, or a 13.3% cost increase.

Costs up, production down means less cashflows, but RRL still needs to invest to maintain production.

For FY25, the company expects to invest $125 million in ‘growth capital’, plus $60 million in exploration and $20 million in McPhillamy’s. ..."
More in depth rationale follows this excerpt.
 
finicky said:
Greg Canavan on fat tail investment advisory today. I agree with him fwiw but have not decided to SELL yet as I am an optimist on the gold price 'medium term'. As he says himself, outside this excerpt, at an A$4,000/oz gold price it's probably a hold. Also unquoted is his opinion that the recent DFS for McPhillamys is uninspiring and costed at a billion dollars.

Held
Vacillating
------

Time to turf this low quality producer

"I’ve said for a few weeks now that I wanted to look at Regis Resources’ [ASX:RRL] quarterly report before making a definitive call on it.

Here’s the TLDR version: It’s a sell.

If you’re interested in knowing why it’s a sell, read on…

It’s important that you do because there is certainly potential for the share price to rally from here. I just think it’s a low-probability outcome.

Here’s the problem: RRL is a high-cost producer that must reinvest a good chunk of its cashflows to maintain production. It calls this reinvestment ‘growth capital’, but it’s actually maintenance capital spending.

Despite this investment, it can’t maintain — let alone grow — production.

It released guidance for FY25 last week and, at best, production will come in at 380,000 ounces. That’s down from 415,000 ounces in FY24. At the upper end of guidance, costs will be $2,740 per ounce, representing a 20% increase on FY24.

There are around $150/oz of non-cash charges in those costs. Adjusting for that gives $2,590, or a 13.3% cost increase.

Costs up, production down means less cashflows, but RRL still needs to invest to maintain production.

For FY25, the company expects to invest $125 million in ‘growth capital’, plus $60 million in exploration and $20 million in McPhillamy’s."
Click to expand...
Perhaps the shareholders of RRL might react well to a takeover bid.

There is a recent article on Kitco.com on the marked lag and in many cases a retreat in the stock prices of Gold Miners compared to Gold in $USD over the past 5-10 years.

gg
 
Garpal Gumnut said:
a retreat in the stock prices of Gold Miners compared to Gold in $USD over the past 5-10 years.
Click to expand...
Yes, although RRL is deserving of not reflecting the gold price and has been for years. There was the hedging debacle and the disguised high cost of production using 'development capital' as the line for what is really just cost.
Then there is McPhillamys which has already cost a heap in preparation but is not an attractive development even at an historically high gold price, much higher than when they bought the prospect.
However I have often gone sour on something just when its ready to get off the mat.
 
I trust those who had planned to exit Regis have done so, if this report from Evil Murdoch Press is accurate.
The shutting down of the McPhillamy project comes hot on the heels of the upholding of appeals against the SVL mine.
It seems that green lawfare is really turning up the heat.
Mick
1723976180239.png
 
mullokintyre said:
I trust those who had planned to exit Regis have done so, if this report from Evil Murdoch Press is accurate.
The shutting down of the McPhillamy project comes hot on the heels of the upholding of appeals against the SVL mine.
It seems that green lawfare is really turning up the heat.
Mick
View attachment 182754
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looks like more cheap RRL coming , now can i be lucky like i was with WHC ( twice )

won't be long before even the Aboriginals won't vote Green or ALP
 
That's mining for you. But RRL would have to be about the worst wealth destroyer among the established gold miners. A really bad series of investing decisions: shocking hedging, overpaying for Tropicana. Why invest so much in a NSW project with so many hurdles?

I guess the aboriginals got their litigation funding from the government too. Where's the personal hazard in running interference when the tax payer or the miner picks up your legal tab?

As a final whinge - Ranger uranium stopped by the feds, now Mcphillamys - is this another payback for 'The Voice', like the state Labor govts' concessions?

Held
Probably will Hold with the possibility of long term gold price appreciation digging me out of the hole some day.
 
well considering has been 4.5 years to get to this stage .. i would be looking at asset-value write downs ( and a 'paper-loss ' ) for RRL

and see how the Federal Budget enjoys that ( not to mention the State Government deferral of future royalties )

( and of course a few more Ozzie investment dollars venturing overseas )

obviously a win/win for ( ALP ) Australia and workers
 

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