Shares to Buy News Regis Resources Limited (RRL)

Shares to Buy Regis Resources Limited (RRL)|ASX RRL StocksRegis Resources Limited (ASX:RRL) is an emerging Australian gold production and exploration company.

Its management team has a successful track record of developing mid sized gold operations within Australia and Africa.

RRL’s flagship is the 100% owned Duketon Gold Project, 130km north of Laverton in WA.

Operations commenced in August 2010 following the construction of the Moolart Well Gold Mine and the mine boasts a JORC reserve of 603,000 ounces (oz).

Average production is expected to be 90,000oz over a six year mine life.

Regis Resources is confident that Moolart Well offers further reserve and resource growth potential from continued exploration programmes.

RRL also has the Garden Well project which is located 30km south of Moolart.

A maiden ore reserve at the Garden Well deposit highlights the potential of the region.

Returning to profit

The commencement of operations at the Moolart Well Gold Mine saw RRL report a profit after tax of $13.52 million for the half year ended 31 December.

This equates to an earnings per share of 3.23 cents.

The result was a huge improvement from a loss of $17 million the previous year.

Gold sales for the period came in at $42.481 million. This was from the sale of 24,207 oz at an average delivery price of $1,408 per oz.

RRL has cash and gold bullion holdings of $21.5 million.

Gold production for its first full quarter of operation (up to December 2010) was 23,851 oz. A pre-royalty cash cost of $450 per oz was achieved.

Resource update

RRL recently announced a reserve increase at Garden Well to 1.66 million ounces (moz) contained gold.

Even more impressive is the fact that 90% of the reserve at Garden Well is within 200 metres of surface and 99% of the reserve is within 250 metres of the surface.

This update increases RRL’s total JORC compliant reserves to 2.5 moz of gold.

RRL believes the updated 2.14 moz resource at Garden Well confirms the likelihood of further reserve upgrades at the project.

The miner expects Garden Well to produce approximately 180,000oz of gold per annum.

Successful development of the Garden Well deposit should lift RRL’s gold production to around 270,000 oz per annum commencing FY13.

Should it achieve that production rate, RRL would be a well established mid tier gold miner.

Gold boom and outlook

RRL is moving towards commencement of a second stand alone mining operation at Garden Well in the September 2011 quarter.

Gold has gained significantly this year, reaching fresh record highs last month as global economic uncertainty, natural disasters and tension in North Africa and the Middle East pushes investors towards the safety of the shiny metal.

The metal printed highs of around US$1577 last month and continues to hold its ground well above US$1500.

With plenty in the reserve growth pipeline and rising gold prices, we feel RRL has plenty of upside potential.

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