Gold price surge boosts Ramelius Resources profits

Company News

by Glenn Dyer

As expected, the late burst in gold prices in the final quarter of 2023 helped mid-tier gold group Ramelius Resources (ASX:RMS) achieve a 42% jump in interim profit.

Ramelius reported a record revenue of $348.5 million for the half, up 14% from $304.8 million in the same period last year, as the surge in gold prices to well over $US2,000 an ounce (more than $A3,000 an ounce) boosted earnings.

EBITDA rose 41% to $140.2 million, and after-tax earnings were up 42% at $41.2 million.

The sharp improvement had been hinted at in the company’s December quarter and half-yearly production and sales reports in January.

The company’s realized gold price in the half rose by 12% to $A2,802 an ounce, as the global Australian dollar price remained above $A3,000 for the final weeks.

The company did not declare an interim dividend for the reported period, as is the company’s policy, and the situation will be reviewed with the June 30 final result figures.

For the first half, production of 124,000 ounces at an All-In Sustaining Cost (AISC) of $A1,899 an ounce, the company confirmed an upgraded full-year forecast of 265,000 to 280,000 ounces of gold at an ASIC range of $A1,750.

As previously reported, the 5% rise in December half gold production came from Ramelius’ Penny mine as well as the addition of the Symes Gold Mine at the Edna May hub in WA.

Ramelius says the reported AISC for the half-year was down 7% from the December 2022 half figure, and it expects the ASIC "to decrease further over the second half of FY24 with an increasing contribution from Penny along with improving grades and strip ratios at the Mt Magnet open pit operations, primarily Eridanus."

At December 31, 2023, the company said it had cash and gold of $281.8 million, an increase of $9.7 million over the half-year and is after shareholder returns (dividend cash payment of $17.3 million), capital expenditure, and acquisition (Musgrave) cash outflow of $89.8 million.

Ramelius says it remains debt-free, "although a committed A$100M corporate facility remains in place, available and undrawn, resulting in total liquidity of $381.8 million."

CEO Mark Zeptner said in Tuesday’s statement that the December 2023 quarter "was a particularly challenging period for the processing and maintenance team at Mt Magnet, with the CV01 conveyor repairs undertaken.”

"It is a testament to our team to have been able to not only meet our production targets for H1 FY24 but also upgrade production guidance for FY24 to 265,000 – 280,000 ounces.

"Our cost guidance for FY24 has narrowed and increased from an AISC of A$1,550 – 1,750/oz to A$1,750 – 1,850/oz due to the increased costs associated with the CV01 conveyor repairs and the increased production from Edna May, which, whilst is a higher cost asset, is still highly cash generative, particularly as existing stockpiles are monetized”.

"Operations at Mt Magnet will be further complemented with the addition of the recently acquired Cue Gold Project in FY25.

"I look forward to being able to deliver a new Mt Magnet mine plan, incorporating Cue, in the current March 2024 Quarter. With both the high-grade Penny ore and Cue providing a source of feed for Mt Magnet, it is indeed an exciting time for that operation.”

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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