• Gold Road impresses with dividend, Regis disappoints with loss
  • 29Metals sees avenue to trim costs after pivoting from profit to loss in 2022

In a reporting season where the top gold performer so far has been African-focused Perseus Mining (ASX:PRU), Gold Road Resources (ASX:GOR) has scored a point for the WA gold producers, with investors taking a shine to its strong full year results.

GOR bucked the trend across the gold space, with profits up from $36.8m in 2021 to $63.7m in 2022 on record gold sales of 156,426oz from its half-share of the Gruyere gold mine near Laverton, co-owned with South African gold giant Gold Fields.

The miner’s total comprehensive profit came in at $130.9m, incorporating the increase in the fair value of its ASX listed investments, many picked up in the DGO Gold takeover which netted Gold Road a significant stake in De Grey Mining (ASX:DEG) giving it a potential seat at the table in discussions on the development of its world class Hemi mine in the Pilbara.

Gold Road will pay a fully franked dividend of 0.5c per share, with cash and short term deposits of $74.4m along with liquid investments worth $406.5m, much of that in its strategic 19.99% stake in $2b capped De Grey.

The Gruyere mine will tip over 1Moz this year since its first gold pour in June 2019, representing the best gold development to be brought to market in Australia since the Tropicana mine.

Nothing in that class or above Hemi, expected to be larger in scale still than the ~350,000ozpa Gruyere, has been discovered since.

Gold Road’s full year dividends came in 1.5x higher than in 2021 on the stronger financial performance, with EBITDA up $60.6m to $180.8m and EBITDA margins up from 44% to 47% despite the impact of cost pressures and inflation across the gold sector.

Gold Road’s realised prices were also up from $2210/oz in 2021 to $2448/oz in 2022, having cleared some out of the money hedges last year.

Meanwhile, peer Regis Resources (ASX:RRL), owner of the Duketon gold operations and 30% of AngloGold’s top-tier Tropicana gold mine was down 3% after electing not to pay an interim dividend.

Regis finished the quarter with cash and bullion of $151m after reporting a $30m net loss after tax, a negative swing from a $26m profit in the first half of FY22.

It sold 227,000oz of gold, generating $197m of underlying EBITDA and $178m of EBIDTA, with its margin falling from 45% to 37%.

Managing director Jim Beyer says improved profit and cash flows are expected over the second half after capital investment in Tropicana’s Havana pit and Duketon’s Garden Well underground which will hit commercial production in the second half of FY23.

After producing 232,147oz at AISC of $1771/oz in H1 FY23, Regis expects to produce 450,000-500,000oz for the full year at the upper end of its $1525-1625/oz cost guidance range.

However, it has made progress on the long delayed McPhillamy’s project in New South Wales, which is in the final stages of the State’s Independent Planning Commission’s assessment process.

The mine could add 200,000oz of production per annum with a 10-year mine life.

If approval comes through, Regis will need to apply the lens of the current cost environment to the mine ahead of a potential FID.

“We think that the McPhillamy’s project is a very solid one. In this inflationary environment, everything’s become a little bit more expensive as it has across the board,” Beyer said on a conference call.

“But we still think that the project is certainly viable. Do we measure that up against other investments? I mean, it’s part of corporate life, right, you’re always looking at other opportunities that might be around you.

“We like the project, it’s a great one to be measuring everything against, but we just continue to look at our options and make sure that … as we move our way through the determination phase of the project and then come in to finalising the estimate and FID that we’re confident that we’ve we’ve got all the right costs, and we’re not going to find that this thing blows out halfway through.

“That’s the most important thing for us.”


Gold Road Resources (ASX:GOR) and Regis Resources (ASX:RRL) share prices today:


29Metals up despite full year loss

With OZ Minerals (ASX:OZL) on the way out the door as BHP (ASX:BHP) lines the pockets of its exiting shareholders with a cool $9.6 billion in cash, the window is open for new copper miners to step into the investment void.

The trouble is finding any that are performing up to scratch.

29Metals (ASX:29M), whose $500 million-plus IPO of the EMR Capital copper business was a big flashing neon sign screaming “this is the top of the market”, made a handy $121 million profit in 2021.

That swung to a $47.2m loss in 2022, despite a fall in the copper price of just US$482/t on average to US$8823/t and favourable AUD:USD exchange rates.

While 29Metals increased copper equivalent production from its Golden Grove and Capricorn mines by 15.6kt to 73.4kt and ramped up revenue by almost $120m to $720.7m, its EBITDA fell from $177.3m to $151.6m and cost of sales including depreciation and amortisation rose a startling $252.7m to $716.8m.

The company paid a 2c per share interim dividend at the half year, but it’s no surprise no full year dividend followed in today’s read.

Boss Peter Albert unsurprisingly fingered cost control as a major focus for 2022, saying labour absenteeism should materially abate in 2023, but said the net loss was heavily impacted by D&A on tailings capacity utilisation and now retired copper hedges.

He said the board of 29Metals has “high confidence” of resolving its issues in the first half of 2023 with plans to reconsider dividends in the August reporting season.

Albert noted it was not ‘Robinson Crusoe’ (i.e. a castaway) when it came to costs.

For the avoidance of doubt, this fictional character is not 29Metals or any of its directors. Pic: Getty

“In terms of the cost base, obviously, a very appropriate and good question, recognising of course that last year, and to some extent this year a lot of attention and focus on sustaining capex and building for the future,” Albert said in response to questions from analysts.

“That’s a big part of the picture and as you say … on a unit cost basis that has an impact and from an overall perspective.

“And yes, as we’re bedding down the operations, we need to continue some of that work. But we’re also very focused on on cost savings this year or cost opportunities that we can see remembering, of course last year was a challenging year, not just for us but for the whole industry.

“Inflationary pressures were one thing which impacted everybody. We’ve seen some of those numbers coming out from some of the bigger companies in the last few days.

“We’re not Robinson Crusoe here and at the same time, as well as inflationary pressures, the COVID, the absenteeism, the need to redeploy resources, all of those challenges, which were unusual last year we wouldn’t anticipate seeing those again this year, at least not to the same degree.”


29Metals (ASX:29M) share price today: