Regis Resources
Regis Resources capped off FY18 with record production and cash flow at its Duketon project. Moving into FY19, the good news is set to continue with an expansion underway at Rosemont and DFS work advancing at McPhillamys.
WA-BASED gold miner Regis Resources has a busy year ahead, with plenty of upside across its portfolio after a record June quarter.
For the final three months of FY18, the miner produced 92,008 ounces of gold, bringing its annual production up to 361,373oz at an all-in-sustaining cost (AISC) of $901/oz.
Record quarter-end cash and bullion holdings of $208.8 million were also a plus, and “testament to the quality” of the Duketon operations, according to Regis Resources executive chairman Mark Clark.
Duketon, the miner’s flagship operation, entered production in 2010 following the construction of the Moolart Well gold mine.
In 2012, Garden Well was added to the mix, which has its own standalone mill, and a year later, the Rosemont hybrid gold project was commissioned, which includes a crushing and milling circuit, with ore slurry pumped to Garden Well’s processing facility.
In FY18, operational excellence continued across the three mines; at Moolart Well, gold production was up 9 per cent in the June quarter as a result of an increase in throughput to a record annualised rate of 3.5 million tonnes per annum (mtpa); 11 per cent up from the prior quarter.
Moving into FY19, the company’s guidance signalled another good year for Regis.
At the end of July, the miner updated the market, announcing FY19 production guidance of between 340,000oz and 370,000oz at an AISC of between $985-$1055/oz.
While production guidance was higher than FY18 figures of between 335,000oz and 365,000oz, warning bells were triggered among the investment community due to the slight rise in AISC guidance.
On 31 July, Regis shares dropped 12 per cent on the ASX; a surprise even its executive chairman Mr Clark didn’t see coming.
“I didn’t imagine that [AISC] was going to be perceived as a big negative,” Mr Clark told analysts in a conference call.
“Our costs are forecast to be marginally higher at Duketon this year because we’re cracking the top of some high-grade starter deposits.
“And I’ll just remind people for the last two years we have given cost guidance, and then our actual costs have been below the lower end of that guidance.”
Mr Clark said investors could expect “more of the same” from Duketon this financial year.
“Certainly, from our perspective, it’s looking like another really strong, robust, high cash generation type year that we’re facing at Duketon,” he said.
Rosemont Underground
One of the biggest growth drivers in the near-term will be an expansion at the Rosemont operation.
In early August, Regis gave the green light for construction to begin on an underground mine, directly below the existing open pit.
Mr Clark said the decision to approve the first underground mine was a “very exciting step for Regis”.
“We believe that the approved Rosemont underground operation is a robust business in its own right; but just as importantly will see the infrastructure in place to grow that mine through exploration from an established underground footprint,” he said.
“This growth opportunity will be targeted both laterally between the two mining zones and at depth and along strike.
“There is also a very strong opportunity to replicate this development path at Garden Well in the near term and then at other Duketon satellite pits in due course.”
The combined open pit and underground mine at Rosemont is scheduled to deliver 10.3 million tonnes of ore at 1.72 grams per tonne for 570,000oz over a current five year mine life.
The underground component has a Mineral Resource Estimate (MRE) of 1.4mt at 5.1 g/t gold for 230,000oz of gold at a 2.0g/t gold cut-off grade.
Mr Clark said development work would begin in the current quarter with permitting, as well as the order of long lead capital items and an underground mining contract tendering process.
In the March quarter of next year, portal development in the southern end of Rosemont Main will commence with processing to begin in the December 2019 quarter.
Mr Clark said once the underground mine was at full mining capacity, the combined operation would produce at a run rate of between 120,000 and 130,000ozpa; an estimated 45,000ozpa uplift on production.
Advancing McPhillamys
Meanwhile, Regis was also working on plans to push forward its McPhillamys project in Central NSW.
The project is considered one of Australia’s larger undeveloped open pit opportunities, with a gold reserve of 2.03moz.
“It’s a significant project for us and we’re expediting work to bring this deposit into production as close to the start-up time at McPhillamys as possible.”
A Pre-Feasibility Study was completed in 2017, which determined a planned 7 million tonne per annum mining and processing operation that would produce an average of 192,000ozpa over a 10 year life.
On 26 July, a Preliminary Environmental Assessment (PEA) was submitted to the NSW Department of Planning and Environment.
Regis said the PEA was the lead document in the development application phase, and the catalyst for the Government to provide the Secretary’s Environmental Assessment Requirements (SEARS) for the project.
SEARS would then allow for the Environmental Impact Statement (EIS) to be appropriately focused to enable regulatory assessment of the project.
Over the next few months – once the EIS is complete – this will then allow for final elements of a Definitive Feasibility Study (DFS) to be signed off.
“We would hope to have EIS and DFS finished at the end of this calendar year, and then subject to the receipt of the final permitting, we would can then move into the development phase hopefully in the first quarter of calendar year 2019,” Mr Clark said.
“We’ve always said it’s between a 10 and 12 month construction period.”
This would mean production could, in theory, begin as early as FY20.
In addition, Regis was examining Discovery Ridge, 32km south west of McPhillamys, as a potential satellite mine.
The Discovery Ridge deposit was acquired last year as part of the Blayney Gold purchase.
Mr Clark said the project represented “an excellent growth option for the company”.
“It has a resource of just over 500,000oz,” he said.
“We’ve had very strong results including 35 metres at 2.54g/t gold and 50.65m at 2.8g/t.”
Mr Clark said in the current quarter the team would be undertaking a 4000m diamond drilling program to test the down plunge extent of the eastern lode of the deposit.
“We expect to update the resource and quote a maiden reserve at Discovery Ridge later in the current quarter, and we’re targeting a substantial satellite project with minimal capital, higher grade and lower strip than the early years of McPhillamys project.
“It’s a significant project for us and we’re expediting work to bring this deposit into production as close to the start-up time at McPhillamys as possible.”
“We believe that the approved Rosemont underground operation is a robust business in its own right; but just as importantly, will see the infrastructure in place to grow that mine through exploration from an established underground footprint.”