Gold Sector Nuggets: RRL, RED, WGX

Company News

by Glenn Dyer

Cost pressures have already emerged for gold miners like Ramelius, St Barbara, Dacian and Evolution and we saw more of the same in the early June 30 updates from Regis Resources, Red 5 and WestGold Resources.

But overall, the updates all were upbeat, with record production for the year and quarter from Regis and WestGold and the promise of a sharp rise for Red 5 once its King of The Hill mine hits its opening bell and ramps up output.

The news saw shares in Red5 end steady on 24 cents at the close Tuesday but there were handy rises for WestGold, up 5.7% to $1.29 and a jump of more than 10% for shares in Regis which closed at $1.60.

…………

Regis Resources (ASX: RRL) said in its ASX update that, “General industry inflationary pressures have continued across our operations and preliminary indications point to a full year AISC (All In Sustaining Cost) slightly above the top end of FY22 cost guidance ($A1,425- $A1,500/oz). Confirmation of the final outcome will be provided in the June Quarter Report released later this month.

AISC for the year to June, 2021 was $1,373 an ounce and $1,387 an ounce for the June quarter.

The company said it recorded June quarter gold production of 123,900 ounces, up 20% from March’s 103,100 ounces and 114,145 ounces in the June, 2021 quarter.

Duketon gold production increased 24% to 92,800 ounces (March quarter, 74,000 oz) which was just under the 96,829 ounces a year ago. The 30% share of Tropicana’s gold production increased 10% to 31,100 ounces (March quarter 28,300 oz) up from 17,317 ounces in the same quarter of 2020-21.

Duketon produced 315,500 ounces in 2021-22, while its 30% share in the Tropicana gold operation in WA totalled 121,800 ounces across the year

Regis said that overall annual gold production for the year to June, 2022 of 437,000 ounces is consistent with FY22 production guidance of 420,000-475,000 ounces and is an increase of 17% on 2020-21 annual production of 372,870 ounces.

“The improved production performance over the June quarter delivered an increase in the cash and bullion balance of $60 million to $227 million at June 30, 2022 (March 31, 2022 $167 million). This increase includes a $17.9 million tax refund during the quarter.

Regis Resources’ CEO, Jim Beyer, said on Tuesday:

“We are very pleased to deliver a record quarter of gold production for the June 2022 quarter. We have seen reliable delivery on our improvement plans that were developed and implemented to address the operational challenges we experienced in the first half of the year. This has seen the company deliver an improved performance despite the challenging external conditions.

“The result is a record production performance for the quarter and overall annual gold production that sits comfortably within FY22 production guidance. The company is now well set for increased annual gold production into FY23. We look forward to releasing the full June Quarter Report along with company guidance later in the month,” he said.

…………

Meanwhile Red 5 (ASX: RED) says it has made a solid start with the ramp-up of its 100%-owned King of the Hills gold mine in WA following the first gold pour in early June.

The mine’s new 4.7 million tonnes a year processing plant “is performing in line with expectations, with a total mill operating time in excess of 84% achieved during June 2022. The SAG mill continues to deliver throughput rates in excess of 600 tonnes per hour at moderate mill loads and power draw< Red 5 said in the update to the ASX.

The open pit and underground mines are also now fully operational, with the first underground stope fired on June 20. Red 5 said the mill feed has been supplemented with higher-grade ore from Great Western. There is currently over 1 million tonnes of ore on the mine’s run of mine (ROM) pad, which is equivalent to over two months of processing feedstock.

Looking at production from its Darlot mine, Red 5 said in its final quarter of processing, the mine produced 64,261 ounces for the year to June (production guidance was 62,000 – 72,000 ounces).

“Red 5 expects Darlot’s full year AISC to be in line with guidance of $A2,400 -$A2,500 per ounce. Trucking of Darlot underground ore to King of The Hill will begin in the September Quarter.

Red 5 said it had unaudited cash and bullion on hand of $55.6 million (compared with $A47.4 million at the end of the March Quarter), of which $A15.6 million is allocated to reserve accounts and bond guarantees. Red 5 has fully drawn down on its $A175.0 million King of The Hill Debt Facility during the June Quarter.

Red 5 CEO Mark Williams, said the company had delivered a solid final quarter of the 2022 financial year, with the key highlight being the delivery of the King of the Hills Project on time and on budget and the successful start of commissioning and ramp-up.

“We are pleased to report on what has been a positive start to the ramp-up program at KOTH since our first gold pour on 5 June 2022.

“Darlot also delivered a positive final quarter of processing, allowing us to achieve guidance for FY22. “

…………

And WestGold Resources (ASX: WGX) says it met 2021-22 production guidance of with a record 270,878 ounces of gold produced which was up sharply from the 245,411 ounces produced in 2020-21.

June quarter production of 72,591 ounces was also a record and up sharply as well from 56,909 ounces a year earlier.

Production from the company’s Cue Gold Operations totalled 24,797 ounces in the June quarter, up from 19,363 ounces a year earlier.

The company said its full year costs “will be reported in quarterly results once final reconciliations completed and expected to be within +/-5% of full year guidance.”

CEO Wayne Bramwell said in the release that the company “has delivered three solid quarters and a cracking Q4 production result that has seen the company achieve its FY22 production guidance.”

“Our team has met every challenge that FY22 has thrown at them, and this result is testament to their resilience and ability to find a way to succeed.

“In FY23 the focus will be on simplifying our business to enhance profitability and Westgold starts FY23 with renewed focus, continued commitment to safety and confidence in our future,” he said.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.