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Regis Resources June 2020 Quarterly Report Activities

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

Regis Resources (ASX: RRL) is a gold production and exploration company. This company has two main operations in Australia. The first operation is in the Duketon region (Western Australia) with three operating mines (100 per cent owned by Regis). The second operation is the McPhillamys Gold Project – NSW (100 per cent owned by Regis). Regis has a market capitalisation of A$3 billion.

 

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What are the key features of Regis quarterly activities report?

Gold production for the June quarter is 87,260oz, up by 1% compared to the previous quarter. Duketon Northern Operation production for the June quarter is 20,743oz, down 13% from the previous quarter. Production was down due to lower ore grades. Duketon Southern Operations production for the June quarter is 66,516oz, up by 7% compared to the previous quarter. Production was up due to higher mill throughput across Garden Well and Rosemont. Regis FY20 full year gold production is 352,040oz.

A highlight of the quarter for Regis is that the Rosemont Underground mine is now ready for commercial production. This was declared on the 1 June 2020. Over the quarter, Regis achieved around 2km of development for the mine.

Duketon Northern Operations All-In Sustaining Costs (ASIC) increased from A$1,350/oz in the market quarter to A$1,519/oz in the June quarter. This was mainly attributed to increased material movements primary at Petra. Duketon Southern Operations ASIC increased from A$1,106/oz in the March Quarter to A$1,308/oz in the June Quarter. This was mainly attributed to increased strip ratio (timing only).

Regis has A$209 million in cash and bullion, up 24% compared with the end of March quarter.

What is the outlook?

The short-term and long-term outlook for Regis is positive. Regis is benefiting from a weak A$ and a rising gold price. The Australian dollar has recovered over the last month and is currently A$1/US0.71 cents. However, this is still weaker compared to previous periods. The spot price of gold is US$1,931, up 35% on the year, which is a strong positive for Regis. The main driver of the positive outlook for Regis is based on the positive outlook for gold prices. This could increase revenue in the short-term for Regis.

The long-term outlook for Regis is positive. Regis management provided guidance on Regis FY21 outlook. Gold production for FY21 is expected to be in the range of 355,000/oz – 380,000/oz. ASIC for FY21 is expected to be in the range of A$1,230/oz – A$1,300/oz. Growth Capital for FY21 is expected to be in the range of A$50 million – 60 million.

In addition, the assessment phase of the McPhillamys Open Pit Development Application continues as planned with Responses to Submissions expected to be submitted in the coming weeks. The hope for investors is that this mine gains approval from the NSW Government with production starting in the coming years.

What is the market reaction to Regis quarterly report?

The market reaction to Regis (yesterday) was neutral. Regis is currently trading at A$5.98. Regis is trading at a forward P/E in the low-teens and has an annual dividend yield of around 2.9%.


Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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