Growth Portfolio: Regis Resources Limited (ASX: RRL)

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Published 08-AUG-2017 00:00 A.M.

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2 minute read

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Overview: Regis Resources Limited ("Regis", "the Company") is an Australian resource company focused on gold mining. The Company’s primary asset is the Duketon Project, located near Laverton in WA, which is projected to produce 335-365k ounces of gold in FY18. The Company has a JORC compliant Ore Reserve estimate of 59.3mt at 1.14g/t for 2.18m ounces of gold and Mineral Resources totalling 8.05m ounces. The Company also owns the McPhillamy Project in NSW and exploration licenses in WA and NSW.

Catalysts: Regis’ Duketon Project has compelling economics in the current price environment and the Company is well-positioned to generate positive operating cash flow. Management targets a 2.5-12.5% increase in gold production with cash costs at the lower end of the industry average. Regis is well funded with over $150 million in cash and gold on hand allowing the company to weather short-term price volatility.

Hurdles: While Regis has a track record of meeting or exceeding its guidance, there is no guarantee that the projected production target can be achieved at a reasonable cost. Gold prices have fluctuated significantly in the past five years and ongoing price volatility could impair the company’s financial performance.

Investment View: Regis offers profitable exposure to gold industry trends. We are attracted to the Company’s current production profile, track record, magnitude of assets, and balance sheet. Risks include mining execution and the volatile gold price. The Company has organically grown its Duketon project through the strategic exploration of adjacent mining tenements, which has improved the project economics while a strong balance sheet allows for ongoing improvement works. Despite a two-year price recovery, gold prices remain ~30% below the cyclical peak and we believe Regis is well-positioned to create shareholder value and benefit from any further price recovery. We initiate coverage with a ‘buy’ recommendation.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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