16-Sep-2024: RMS released this today: September 2024 - Gold Forum Americas Presentation

[link didn't work, but hopefully I've fixed it now]

Interestingly, they went ex-div for a 5 cps fully franked dividend on Friday (13th Sept) and their share price didn't fall - it actually rose - they were up +14 cps or +6.54%, which is a fairly decent move on a day when buyers do NOT get their latest dividend. They're down today however. At this point, around 1:30pm Sydney time, RMS is -9 cps (-3.95%), yet still above where they were on Thursday evening (@ $2.14, now $2.19) before going ex-div on Friday.

I hold Ramelius Resources (RMS) - they have everything I'm looking for in an Australian gold producer right now, as I've explained in other straws and/or forum posts here. Good management who are very disciplined around M&A, good growth, zero debt, a pile of cash, increasing dividends, very profitable, and low costs - one of the lowest cost gold producers in Australia currently, and they're finding more gold around their existing tenements, close to their own mills, and good grades too.

The thing is - they've risen from a recent low of $1.82 on August 8th, to $2.28 on Friday (13th Sep) at the close, so they've put on +22% in five weeks, so they're not as cheap as they were. Still a hold here though, if not an outright buy. My best guess is they go higher from here, because they have so many positives, and the only negative would be a falling gold price, and we haven't got that at this point in time, so as long as the gold price holds up (or rises), RMS still look very good to me. I hold them in my SMSF as well as in my other larger portfolio.

Further reading: https://www.rameliusresources.com.au/presentations/

https://www.rameliusresources.com.au/company-overview/

30-Aug-2024: I was going to title this straw "Hedging", but it's really a bull case for Ramelius (RMS), so I've changed the title to "Bull Case". Let's start with their RMS' hedgebook as at June 30th now that they've reported - and their hedge book is now down to 155 Koz, as we can see on slide 10 from their FY24 Financial Year Results Presentation [released on Monday, 26th August]:

It was 211 Koz at June 30, 2023, then 19 Koz less at 192 Koz at Dec 31, 2023, and then 37 Koz lower at 155 Koz at June 30, so those hedges are reducing.

The yellow line is their average contracted gold price for their remaining hedges, which keeps rising, as I note below. It stood at $3,081/oz at 30-June-2024.

Below is from page 92 of their FY24 Annual Financial Report:

I think they will continue to increase the rate at which they close out those hedges and reduce their hedgebook. They also appear to be selling into their lowest priced hedges, because the remaining average contracted price (A$/oz) is increasing from $2,772 at 30-June-2023 to $2,918 at 31-Dec-2023 to $3,081 at 30-June-2024.

And it doesn't seem to be negatively affecting their numbers. Here are the FY24 highlights:

This is possible through a relatively small hedgebook at relatively high prices, meaning they are more exposed to the higher spot price, as well as having some of the lowest costs across the Australian gold industry. Ramelius are certainly in the lowest quartile of the cost curve. There are not too many Aussie gold producers with lower costs unless you start using copper production for byproduct credits (like Evolution Mining does with two of their mines producing far more copper than gold).

Here's Ramelius' FY24 cost Breakdown:

FY24 Group AISC of A$1,583/oz, and Group AIC of A$1,895/oz, when many of their peers are well over $2,000/oz for their AISC and don't even disclose their AIC like RMS do.

You can also see there (above) that their June 2024 Quarter Results were lower than that, at A$1,362 (AISC) and A$1,622, so they're trending DOWN, not up.

Here's their guidance for the current year (FY25) that will end on June 30 next year:

Conservative FY25 production and cost guidance range of 270 to 300 Koz gold at $1,500 to $1,700 AISC (mid-points of 285 Koz @ $1,600/oz), much the same as FY24 (293 Koz @ $1,583/oz) and given that based on recent history they will probably hit the top end of that production guidance or exceed it, and be within the lower half of their cost guidance, I would say that FY25 is going to be AT LEAST as good as FY24. In fact, it SHOULD be better, because their Capex is going to be lower so their AIC is going to be lower in FY25 than in FY24.

They've got an FY24 AIC of $2,292/oz there in the table above which is $397 higher than the $1,895 FY24 AIC they've got on slide 24 of the same presentation (two tables up here) - and I can explain that difference. First, both of those slides are from the same slide deck, being their 25 page FY24 Financial Results Presentation (pages 13 and 24), however slide 24 - which is Appendix 8 (two tables up from here in this straw) - has an explanation at the bottom saying: See ASX Release “June 2024 Quarterly Activities Report”, 29 July 2024. Subsequent to the release of the June 2024 Quarterly Report, an error was noted in the reported YTD AIC for FY24. The corrected YTD AIC is shown in the table above. The incorrect (overstated) AIC as reported in the June 2024 Quarterly Report were Mt Magnet (A$2,289/oz), Edna May (A$2,153/oz) and Group (A$2,292/oz).

On that slide, the corrected numbers were Mt Magnet (A$1,726/oz), Edna May (A$1,942/oz) and Group (A$1,895/oz). However, back on slide 13 (the first table above) they have used that old (incorrect) $2,292 Group AIC number. That is wrong - it should be $1,895, same as on slide 24 (second table up from here).

If you want to view the incorrect numbers on their June quarterly report, you can view that report here: June 2024 Quarterly and FY25 Guidance presentation - the slide they're talking about is slide 12 of that presentation. They may not have considered it material (in terms of putting out a correction sooner) because they were overstating their costs not understating them, but it is important to get that number correct, otherwise it would have looked like a substantial drop in AIC between FY24 and FY25, when it fact it's going to be fairly similar AIC (All-In Costs), just likely a little lower in FY25 based on their guidance mid-point. So with that in mind, it's not good that they put the wrong number in the table on slide 13 (again) a full month later, having noted the correction further down in the same report (on slide 24).

In summary their correct FY24 AIC is A$1,895, and they're guiding for an AIC of between A$1,700 and $1,900, so the FY25 guidance mid-point is AIC of $1,800/oz, vs $1,895/oz (actual) for FY24, so lower overall costs this year hopefully. And the gold price might just keep rising too!

These last two slides (below) sum up where I see the value in RMS right now. Firstly rising dividends to add to the TSRs, which are supported by rising earnings, and then the stuff on the final slide - which is all about management execution in terms of strategic planning and sensible capital allocation decisions, as well as a series of near-term positive catalysts that should keep driving the share price higher if things go to plan.

So, hopefully you can see why I'm happy to be holding RMS at this point. They made a new 12-month high today also, which also happens to be their new all-time high. They closed at $2.22 today and they tagged $2.23 during the day. They've never been this high before. And it's pretty obvious to me that they are in better shape than they've ever been before, so it makes perfect sense for them to be making new all-time highs.

26-August-2024: RMS-FY24-Financial-Results-and-Dividend.PDF

That's the first page (link above).

Also: 2024-08-26 Financial Report and Appendix A4 for the Year Ended 30 June 2024

And: FY24 Financial Results Presentation

And: August 2024 - Diggers and Dealers presentation

Disclosure: I hold RMS shares.

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.

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.

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.

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.