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Regis Resources Quarterly Activities Report - Flat Result

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities 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$2.4 billion.


regis report


What are the key features of Regis December quarterly results?

  • Gold production for the December quarter is 90,849 ounces, up 3.6% from the previous quarter.
  • All in Sustaining costs (ASIC) for the December quarter is A$1,219/oz, down 1.2% from the previous quarter.
  • Full Year Production Guidance remains unchanged, with a production range of 340,000-370,000oz.
  • Cash and bullion increased by A$21.4 million to A$168.8 million at the end of the quarter (Sept 19: A$147.4m), after payment of A$32.4 million in capitalised mining costs, A$10.4 million on exploration and feasibility projects, A$15.2 million in income tax payments and A$17.0 million on several significant capital projects.

Regarding the McPhillamys project, Regis management notes that:

the McPhillamys Gold Project saw its Development Application move through another stage, with the completion of the public exhibition of the Environmental Impact Statement and subsequent receipt of submissions from regulators, interest groups and the public. We are now well underway with the preparation of our formal response to the submissions received, with this to be submitted to the NSW Department of Planning, Industry and Environment in due course.


What is the outlook for Regis?

The outlook for gold is not looking as favourable as it has been last year. This is in light of global economic conditions improving and new developments with certain countries that can improve economic certainly within the global economy. In particular, the United States (US) and China recently signed phase one of a new trade deal between the countries. Additionally, there is increased certainty that the newly elected Prime Minister Boris Johnson will deliver Brexit, with the United Kingdom (UK) expected to leave the EU on 31 January 2020. After this, the UK will begin the transition period involving the UK negotiating a new trade deal with the EU. If this deal is reached, global economic and political concerns may ease, causing the outlook for the gold price to be not as favourable as it had been in 2019.

That said, there is one main global political uncertainly that remains. The US authorized a drone strike on Iran’s top military commander, Qasem Soleimani, which resulted in Qasem Soleimani’s death. This has significantly increased military tensions between the US and Iran in the middle east. Iran responded by launching more than a dozen missiles at two Iraqi bases that hold US troops on 8 January 2019. It is possible that this military action by both countries may lead into a conflict between the US and Iran along with their allies.


What is the market reaction?

The initial market reaction to Regis December quarterly report is broadly neutral. Regis share price is down 0.1% and is currently trading at A$4.62. Regis is trading at a forward P/E ratio in the low-teens and an annual dividend yield of 4.1%.


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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