Reporting Season: Regis Resources Ltd (RRL.ASX)

Reporting Season, Stocks Aug 27, 2020 / Reading Time: 2 mins
By Edward Heng Reading Time: 2 mins

Maqro Research Team Coverage

Overall, RRL missed expectations on both earnings and dividend, although growing significantly from last year. This is largely due to a much higher average realised price of gold as RRL’s production numbers decreased by about 3% since FY19. RRL expects stronger production in FY21 (355,000 – 380,000 ounces).

https://maqro.com.au/download/35273/

 

Key Metrics:

Duketon South Operations Gold Production259,858 ounces, a decrease of 5.46%
Duketon South Operation AISC$1,218, which was an increase of 19.41%
Duketon North Operations Gold Production92,184 ounces, an increase of 4.09%%
Duketon North Operation AISC$1,324, which was an increase of 25.5%

 

FY21 Guidance:

  1. C1 cash cost including royalties: A$1,030-1,090 per ounce
  2. AISC: A$1,230-1,300 per ounce
  3. Growth capital: A$50-60 million
  4. Exploration: A$35 million
  5. McPhillamys: A$15 million (this is the minimum spend for FY21)

Regis Resources Ltd Conference Call Highlights

  1. Corporate expenses shouldn’t be expected to change too much in the coming year, while RRL hasn’t provided a D&A guidance – they expect it to increase, but won’t provide anything specific.
  2. RRL requires at least a gold price of A$2,100 an ounce to make their numbers, has stated that they won’t use today’s cashflow to fund tomorrow’s gold – or they won’t return anything to their investors.
  3. The grade of gold at the Ben Hur mine which they acquired is definitely attractive but they aren’t pushing to mine it just for the sake of it.
  4. The dividend reinvestment plan that RRL has announced is a way in which RRL says it can highlight the fact that it feels like its undervalued, and that it can reduce some of the brokerage costs to its current investors – not significantly, but everything does add up.
  5. A “significant” amount of it’s current gold production is being sold at the full current prices, though it is selling some gold into the lower hedge.
  6. RRL’s slow dividend growth over the past 4 years compared to the growth in their financial metrics is due to the prudent nature of the management team – and with the McPhillamys project expected to demand capex, RRL has decided to reduce growth in dividends rather than finding other ways to fund the project.
  7. RRL hasn’t yet come to any final decisions on capex requirements on further projects – those decisions will be ratified by the board first in any case. He said that the $15m figure was an old figure but could be upgraded to as much as $50-60m, depending on requirements for various projects.