Regis 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.

It has been one of the hot shares in the past year, having more than tripled in price since July 2010.

Today, RRL reported a maiden FY12 net profit of $36.3 million.  The result compares to a net loss of $18.3 million in FY11.

The group posted gold sales of $107.9 million as it successfully transitioned from explorer to producer.

RRL said the development of the Garden Well Gold Project will take its output to around 350,000 ounces in FY12/13.

Therefore it will be one of the shares to watch.

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Regis 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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Regis Resources Limited (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.

RRL 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.

Quarterly results

For the December quarter, RRL produced 23,851 oz from Moolart at a cash cost of $450 per oz (prior to royalties).

Total costs for gold produced came in at $10.73 million prior to royalties.

Gold sales totalled 20,921 oz at an average price of $1387 per oz.

This brought in revenue of $29.02 million. Cash and gold bullion on hand at 31 December 2010 was $21.5 million.

Gross profit for the quarter was approximately $18.29 million.

Gold production for the half year ended June 2011 is forecast at between 45,000 – 50,000 oz at cash cost before royalties of $500 – $550 per oz.

This will result in a gross profit in the range $40.5 – $42.5 million assuming all gold produced is sold and an average gold price of $1400.

Resource update

RRL announced a resource increase at Garden Well to 2.14 million ounces (moz) contained gold.

A new reserve estimate following the resource upgrade will be completed this month.

Results from a diamond drilling program which commenced in January 2011 are scheduled for release in June 2011.

Regis Resources Limited 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

Gold has gained over 30% this year, reaching fresh record highs last week as tension in North Africa and the Middle East pushes investors towards the safety of the shiny metal.

The metal printed highs of around US$1440 last week and continues to hold its ground well above US$1400.

Inflation continues to be an issue and is likely to contribute to the gold price rally.

With plenty in the reserve growth pipeline and rising gold prices, RRL will be one of the gold stocks to watch in coming months.

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