Regis re-jigs McPhillamys-less growth plans: Gold Forum Americas 2024
Now-unviable McPhillamys was never the “heart” of the business: Beyer
Regis Resources is wondering where to deploy its growing pile of cash now that its 2.7Moz, A$1 billion McPhillamys gold project in New South Wales, Australia, is no longer viable.
Managing director and CEO Jim Beyer told the Gold Forum Americas in Colorado Springs it could be another five to ten years before the company would be in a position to make an investment decision on the asset — if, of course, it dedicated the necessary time and money into finding a new location for the tailings facility.
It comes after the Australian Federal Minister for Environment and Water, Tanya Plibersek, last month made a "declaration of protection" over the part of the project where the tailings storage facility was to have been located.
While Beyer said Regis was examining both its legal options and alternative tailings dam sites, the government decision left it without a clear future target.
"This time five weeks ago, Regis was a company that had a very, very strong cash generating capability … and quite a large project that was the target and the focus of our of our attention," Beyer said.
"We now have a project that is easily three to five years away before it even contemplates being restarted. So, our position has changed quite significantly from having a clear objective of where our capital investment was going to head."
Of course, this is not necessarily an unenviable position; having spent just shy of $100 million getting rid of a painful legacy hedge book last year, Regis posted record operating cash flows of A$475 million over fiscal 2024, with $296 million cash and bullion on hand at the end of June.
The company is investing US$75-82 million in growth capital at its Duketon operations over FY25 as it works towards building at least four underground mines with production capacity of between 200,000 and 250,000oz of gold per annum.
Between $7 and $10 million in growth capital will go towards its 30%-owned Tropicana operation, with vision towards annual attributable production of 135,000-150,000oz.
Just last week, Regis gave the green light to develop the Havana underground operation at Tropicana alongside partner AngloGold Ashanti.
"McPhillamys is not the key and the heart of the business. The key and heart of a business for us is the operations that we've got running in in Western Australia," Beyer said.
"And if you look at the rough midpoints — 365,000 ounces, the midpoint of our guidance for next year, and all its sustaining costs sitting at $1750/oz … we will generate significant cash flow this coming financial year."
He said the organic growth opportunity at the two key assets was clear, and it was now just about figuring out where to direct cashflow as Regis dealt with the fallout of the McPhillamys decision.
Beyer was tight-lipped about whether this would involve inorganic growth or M&A, or if there was another development asset that may be catching the company's eye — perhaps one with a lower development price tag than McPhillamys.
In any case, he maintained that McPhillamys or not, Regis remained a "golden opportunity".
The stock last traded at A$1.96, capitalising it at $1.5 billion. It had traded between $1.44 and $2.33 over the past year.
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