07-March-2024: Ramelius in 'trading halt' to respond to takeover speculation (miningnews.net)

RMS ASX: Ramelius Resources in exclusive due diligence to acquire Karora Resources (afr.com) [Sarah Thompson, Kanika Sood and Emma Rapaport, Mar 7, 2024 – 12.26pm]

Street Talk

Ramelius in exclusive due diligence to buy Karora

Ramelius Resources is in exclusive due diligence to acquire Toronto-listed WA gold miner Karora Resources, which it hopes will add a new production centre to replace its ageing Edna May asset.

Street Talk can reveal Ramelius boss Mark Zeptner will spend $700 million to $1 billion for the acquisition. Karora will bring new production hubs with mills, and could help the company consolidate its position in the region. A Ramelius spokesperson declined to comment.

Ramelius Resources chief executive Mark Zeptner. Billy-Ray Stokes

Karora’s portfolio, located 60 kilometres from Kalgoorlie, includes 100 per cent ownership of the Beta Hunt mine, Higginsville gold operations and Spargos gold mine. It is expected to produce 170,000 to 195,000 ounces gold in 2024. By contrast, Ramelius has told shareholders it would hit 272,500 ounces production this financial year.

Zeptner and his team are chasing the acquisition after a period of solid performance and perky gold prices. Ramelius shares have risen nearly 48% in the past year, giving it a $1.8 billion market capitalisation and a strong balance sheet.

In particular, it has benefited from high-grade Penny ore being fed into the Mt Magnet Mill. Cash and gold reserves are expected to hit $400 million by year-end, while about $100 million in undrawn debt would further boost its liquidity profile.

Ramelius reported a 14% increase in revenue to $348.5 million at its half-year results on February 20. EBITDA shot up 39% to $140.2 million, thanks to a 12% jump in realised gold price.

New production centre

Ramelius’ biggest asset is the Mt Magnet production centre, which it started building via a $40 million acquisition in 2010. Now, 14 years on, Mt Magnet speaks for 62% of the group’s gold reserves. When combined with Vivien and Penny, it is 53% of the total net present value, according to Macquarie Capital analysts. Production is expected to reduce significantly by the 2029 financial year.

But the more pressing matter for Zeptner has been finding a replacement for Edna May, which it bought from Evolution Mining in 2017. It is now just 2% of the reserves, with a significant production slump ahead in the 2025 financial year. Other bets like the Rebecca project are still a long way from spitting out cash.

Put that all together, and it’s not surprising the management has been on the prowl for acquisitions. Sources told this column logical targets had included Spartan Resources as well as Northern Star’s Carosue Dam. However, the former isn’t operational, while the latter would have been hard to prise from its current owner.

The mooted acquisition at Karora comes after Ramelius acquired ASX-listed gold junior Musgrave Minerals in September.

--- end of excerpt --- [small edits by me]

Disc: I hold RMS and NST shares in real money portfolios, and NST here on SM.

RMS is in a trading halt tonight pending a response to this media speculation in the AFR, which sounds like it's on the money.

22-June-2020:  Ramelius on track for record quarter FY2020 Guidance upgrade

RAMELIUS ON TRACK FOR RECORD QUARTER OF OVER 80,000oz GOLD PRODUCED, FY2020 GUIDANCE UPGRADED

HIGHLIGHTS

• June 2020 Quarter production already a new record of 74,371oz (as at today’s date)
• Full June 2020 Quarter production now expected to exceed 80,000 ounces (Previous Guidance was 65 - 70,000oz)
• Full FY2020 production Guidance upgraded to record 225 – 230,000 ounces (Previous Guidance 210 – 220,000oz)

Ramelius Resources Limited (ASX: RMS) is pleased to advise that it has exceeded the Production Guidance range for the June 2020 Quarter, with 74,371 ounces of gold produced as of 21 June 2020.

This already represents record quarterly and annual production for the Company with two weekly gold pours remaining and has been achieved as a result of excellent performance from both West Australian production centres, particularly Mt Magnet.  Based on the production figures received to date, Ramelius has upgraded Guidance for both the June 2020 Quarter and FY2020 as highlighted above.

Ramelius Managing Director, Mark Zeptner today said:

“We are obviously delighted by the operational performance in achieving records in both quarterly and annual gold production, particularly against the backdrop of COVID-19 and the additional administrative requirements the pandemic has necessitated.

We remain confident that Ramelius, with its high-performing team, excellent cash generation and enviable balance sheet, is very well positioned for the next stage of growth.”

Further details will be available in the Production Update and full Quarterly Activities Report, both due in July 2020.

--- ends ---

Gotta love upgrades!  The RMS share price was up +16.76% today on the back of this one.  They now have a market cap of AU$1.44 billion, and are firmly within our top 10 pure-play gold producers that are based here in Australia with their primary listing on the ASX.

The goldnerds.com.au spreadsheet lists the top 15 like this:

1. NCM, Newcrest Mining
2. AGG, AngloGold Ashanti *
3. KLA, Kirkland Lake Gold *
4. NST, Northern Star Resources
5. EVN, Evolution Mining
6. SAR, Saracen Mineral Holdings
7. RRL, Regis Resources
8. AQG, Alacer Gold *
9. SBM, St Barbara
10. OGC, OceanaGold
11. SLR, Silver Lake Resources
12. RMS, Ramelius Resources
13. GOR, Gold Road Resources
14. PRU, Perseus Mining
15. RSG, Resolute Mining

After RSG, which has a market cap of $1.23 billion, there's a big step down to #16, which is WGX (Westgold Resources) with a market cap of only $853 million.

* However, #2, #3 and #8 (AGG, KLA & AQG) are secondary listings here by companies that are based in South Africa, Canada and the USA respectively.  If you filter those three out, you are left with the following top 12:

1. NCM, Newcrest Mining
2. NST, Northern Star Resources
3. EVN, Evolution Mining
4. SAR, Saracen Mineral Holdings
5. RRL, Regis Resources
6. SBM, St Barbara
7. OGC, OceanaGold
8. SLR, Silver Lake Resources
9. RMS, Ramelius Resources
10. GOR, Gold Road Resources
11. PRU, Perseus Mining
12. RSG, Resolute Mining

RMS is now only 3.2% behind SLR's market cap, ($1.706b vs $1.760b), so RMS could easily overtake SLR if they have another day even half as good as today was.

GoldNerds works out the market cap a little differently - as explained below:

Market Capitalization = The value the stock market is currently putting on the entire company.

The market capitalization ("market cap") of a company is all of the following:

• The value of the company as determined by its recent share price and share structure. 
• How much it would cost you to buy the entire company, at the recent share price. 
• The value of all the company's assets, both financial and physical, including liabilities as negative assets.

To buy a company entirely, you must buy all of the:

• Fully-paid shares (both quoted and unquoted on the stock exchange);
• Shares that could be issued to holders of in-the-money options and warrants; and
• Shares that could be issued to holders of in-the-money partly-paid shares.

Out-of-the-money options and warrants and out-of-the-money partly-paid shares are worthless if someone were to buy all of a company at the current share price, because their holders would pay more than the recent share price to convert them into a fully-paid share.

The market cap is therefore calculated as the sum of:

• The number of fully-paid shares multiplied by the recent share price;
• The number of in-the-money options and warrants multiplied by the differences between their strike price and the recent share price (for each series of options or warrants); and
• The number of in-the-money partly-paid shares multiplied by the amount owing on each partly paid share (for each series of partly-paid shares). 

Which is equal to the current share price multiplied by the combined number of shares and in-the-money options, warrants, and partly-paid shares, less the cost of exercising the in-the-money options and partly paid shares (the option cost).

Market cap is of interest in our analysis only because it usually roughly equal to the enterprise value (EV) of the company (because the financial net assets of a company are usually small compared to the physical assets of the company).  The EV is the value the stock market is currently putting on the physical (non-financial) assets of the company.

Those same 12 gold producers in order of Enterprise Value (EV) is similar, except RMS moves up one position (leapfrogs SLR) and RSG also moves ahead of PRU:

1. NCM, Newcrest Mining
2. NST, Northern Star Resources
3. EVN, Evolution Mining
4. SAR, Saracen Mineral Holdings
5. RRL, Regis Resources
6. SBM, St Barbara
7. OGC, OceanaGold
8. RMS, Ramelius Resources
9. SLR, Silver Lake Resources
10. GOR, Gold Road Resources
11. RSG, Resolute Mining
12. PRU, Perseus Mining

Of these 12, I currently hold NST, EVN, SAR, RRL and SBM.  From outside of those lists, I also hold PNR (Pantoro) which comes in at #19 on the EV list, and at #16 on the Market Cap list.  The Producers list - with minimum 70% gold production - vs all other metals, and all companies headquartered here in Australia, so not including AGG, KLA or AQG - runs to 25 companies according to GoldNerds.  The lower 13 - in EV order (biggest to smallest, continuing from PRU above) - are WGX, RED, DCN, PNR, TBR, BLK, BCN, MML, TRY, RND, WWI, AUL & KRM.  

I also hold a couple of Developers and Explorers, being BGL and YRL - who are both still considered explorers because neither has reached FID - Final Investment Decision - to develop their respective projects into operating mines.

On top of the 25 Gold Producers, there are another 41 Gold Project Developers at various stages of project development, and another 99 Gold Explorers for a total of 165 companies.  And that's using those filters - they must be 70% or more in gold, and headquartered in Australia with their primary stock exchange listing here.  Remove those filters and the 165 becomes 222 companies.

As of tonight, there are a grand total of 2,127 companies listed on the ASX - you can view the complete list here - and 10.4% of those companies (222) are either gold miners, gold project developers or companies exploring for gold.  That's quite a large proportion of the market when you think about it.  Of course, many of those companies are very, very small, and most of them will go broke before they find something worth mining - or they'll change into a different type of company with a different focus, like a small biotech or fintech with another wonderful story.  Remember the dot com bubble?  So many of those new start-ups were ex-precious-or-base-metals-explorers.  

Anyway, the point is, you can afford to be choosy.  There are many gold companies to choose from, so choose wisely.  

RMS looks like one of the better ones.  I've held them before and I like their management.  I will probably hold them again.

27-Oct-2020:  September 2020 Quarterly Activities Report

That's directly from the RMS website (https://www.rameliusresources.com.au/) so does NOT contain the ASX's "FOR PERSONAL USE ONLY" over the top of everything.

I consider this to be a good report, although I note that not too many stocks are rising today, even when they have good announcements.  [I hold RMS shares.]

Revolving Syndicated Debt Facility established

I sold earlier this week when I noticed RMS share didn't do much during the rally in the gold price which was a good decision given the share price has been trending down ever since. Plus I had to pick something to sell after buying into Nufarm. Not sure what to make of this announcement but I think they have done this in case their future earnings/ production underperform.

Other things to question is the early sale of their LTR lithium royalty and cancellation of their dividend.

So right now, one of the most undervalued producers in the Gold sector, but it is cheap for a reason.

I think this announcement was largely expected due to the changing cost structure in the WA industry over the last year. Overall I consider this is a positive reflection on managment quality that they choose to shelve the stage 3 production for a later time. Even though at the current prices it would still make money and add to their production numbers. I am very happy for them to keep it in the ground as a gold reserve that can be tapped when conditions and margins will be better.

It also enables them to save the capex costs which were now up to $220m. They have also maintained there 3 year production guidance and the Edna May mill has ore until 2025. So it would seem likely that the stage 3 project will get revisited pretty quickly if either the industry cost pressures decrease or the gold price goes on a sustained run higher.

This defferal also gives them the space to aquire the 3rd production hub that they have been looking for. They have been talking about this since late 2020 I think, which is fine with me as one of the things I like about RMS is that they are careful at with what they buy. Given that the gold price is now recovering and interest in the sector is increasing again it is probably a much easier time to raise the capital for an aquisition.