Regis Gives Back Recent Gains on WA Weakness




Three weeks ago, Regis Resources was talking up its McPhillamy’s gold mine prospect in the central west of NSW after the project had received consent from the state government but yesterday it was a different story with the company revealing a very weak performance from is WA mining operations.

The update to the ASX ahead of the release of its full March quarterly saw Regis shares slump 12% at one stage after the company revealed gold output went sideways as costs jumped sharply.

The shares ended the day at $2.15, down 11%.

Regis downgraded its full year production forecast while lifting its cost outlook for the year to June which it blamed on a disappointing March quarter, changes to mine schedules, and inflationary pressures.

Regis now puts full-year production guidance at between 450,000 ounces and 470,000 ounces. While Regis said that is "within the original guidance range" of 450,000 to 500,000 ounces it is still a noticeable fall of up to 10%.

Its All in Sustaining Costs (AISC) have risen from $1,795 to $1,845 an ounce, up to 13% worse than the original forecast for an AISC of $1,525 to $1,625 an ounce.

The downgrade was blamed on lower-than-expected gold production in the March quarter, as well as changes to mine schedules and inflationary pressures.

The company said gold production totalled 103,728 ounces over the first three months of 2023, only a few thousand ounces higher than the 103,100 ounces for the March, 2022 quarter.

Regis said the disappointing production was largely due to the slower-than-expected ramp-up of the Duketone Garden Well South underground, unplanned maintenance at the Rosemont process plant, lower underground performance at Tropicana, and wet weather.

It also lifted its growth capital forecast to $195 million to $205 million today – up from $180 million to $190 million.

One positive from the report was the company’s statement that all non-weather-related issues have since been rectified and production is now back on track in the early part of the current quarter.

But Regis here cautioned that Duketon had experienced wet weather impacts late in March, "which have extended into April… We note that the potential for extended wet weather events continue.”

But the company’s cash and bullion balance lifted $53 million in the quarter to $204 million. That includes a $67 million tax refund.

CEO Jim Beyer commented, “The performance in the March quarter was below expectation, however, we remain on track to deliver the long-term plans for the Company. Over the last two years we have been investing heavily in our existing operations for a future of growth. We are coming to the end of that investment period and looking forward to entering the cash build phase over the June quarter.

The full March quarter report will be out on April 27.