Release Date: February 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ramelius Resources Ltd (ASX:RMS, Financial) reported record half-year revenues of just under $350 million, driven by higher gold production and improved gold prices.
- The company achieved an EBITDA of over $140 million, representing a 40% increase from the prior period and a 40% margin.
- Production guidance for the second half of FY '24 indicates a material increase in gold production and a corresponding drop in all-in sustaining costs.
- The company has a strong balance sheet with $282 million in cash and gold, and no debt, providing a solid foundation for future investments.
- Labor constraints have eased, and high-grade ore sources like Penny are expected to contribute significantly to future production.
Negative Points
- Despite a slowing rate of cost increases, operational costs remain high, impacting overall profitability.
- Ore tonnes mined were down, although this was mitigated by higher grades and stockpiles.
- The underground operations at Mt Magnet saw a decrease in tonnages, although this was offset by higher grades from Penny.
- The company faces ongoing inflationary pressures, which could impact future cost management.
- There is some uncertainty around the timing and approvals process for new projects like Rebecca/Roe, which could affect future production timelines.
Q & A Highlights
Highlights of Ramelius Resources Ltd (ASX:RMS) Earnings Call
Q: Just keen to understand the range of outcomes and the feasibility for Rebecca/Roe, particularly on timing and approvals process.
A: (Mark Zeptner, CEO) At Roe, we're still drilling to convert Inferred ounces to Indicated ounces. Rebecca is more advanced, and we're looking for water sources and have commenced work on the approvals process. We aim to lodge the approvals later this year, with a detailed timeline to be provided around midyear.
Q: As you get into these Cue assets, how will the mix of tonnage from pit versus underground look?
A: (Mark Zeptner, CEO) The highest grade, such as Penny, will go in first. Cue will largely replace Eridanus and Brown Hill with higher-grade open pit material. We expect strong gold production from Mt Magnet in FY '25 when Cue comes online.
Q: How are you thinking about funding for the Rebecca project, and will it affect the dividend payout?
A: (Mark Zeptner, CEO) We have several funding options and aim to maintain a sustainable dividend. With strong cash flows and a robust balance sheet, we will make funding decisions post-study completion.
Q: Can you talk about the expected grade consistency at Penny as stoping ramps up?
A: (Mark Zeptner, CEO) The average grade will be around the reserve grade, but there will be some lumpiness. Daily grades can vary significantly depending on the part of the ore body being mined.
Q: Has anything changed in the current environment to reconsider Edna May Stage 3?
A: (Mark Zeptner, CEO) We will review the project in March or April. Labor and inflationary pressures have eased somewhat, and we will reassess the viability of the project then.
Q: Are there any specific concerns with the approvals process for incorporating Cue into the mine plan?
A: (Mark Zeptner, CEO) No significant concerns. The mining proposal was submitted in December and is progressing well. We expect approvals before finishing mining at Eridanus around midyear.
Q: When can we expect the new mine plan for Mt Magnet and the PFS for Rebecca?
A: (Mark Zeptner, CEO) The Mt Magnet mine plan will be released this quarter, and the PFS for Rebecca is expected around midyear.
Q: When will the Musgrave ore be processed at Mt Magnet?
A: (Mark Zeptner, CEO) We aim to start mining in the September quarter of 2024, with first ore expected in the December quarter of 2024.
Q: Can you summarize the financial outlook and future plans?
A: (Mark Zeptner, CEO) We are well-positioned for 2024 and beyond with a strong balance sheet, disciplined investment approach, and ongoing exploration. We expect to deliver our tenth consecutive full-year profit and annual dividend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
