Monsters of Rock: After two years in the doldrums is everything starting to come up Regis?

Mid-tier gold miner Regis Resources closer to realising potential after recent approvals and exploration updates
Investment bank RBC says RRL is its ‘top mid-tier gold’ pick
Kin Mining adds to Dacian holding, building blocking stake with Delphi

Check out the catalogue of ASX 200 stocks shooting below their potential over the past two years and gold miners will feature heavily.

One that has copped more pain than most is Regis Resources (ASX:RRL), the $1.4 billion capped mid-tier with operations around the Laverton gold district in WA’s Goldfields region has suffered the ignominy at times of trading at a lower market cap than market darling Capricorn Metals (ASX:CMM).

That is particularly notable not only because CMM was once a (much cheaper) takeover target for Regis, but because Capricorn’s board is led by one time Regis boss Mark Clark and backed by many of the same faces that turned Regis into a golden goose.

It also comes despite the fact that Regis, unlike Capricorn, is a dividend payer (though its tough FY22 half-year notably saw the mid-cap drop the return) and produces around four times as much gold. Though maybe size really doesn’t matter after all.

Down ~70% from its boom time high in mid-2019 and ~10% over the past 12 months, Regis has been due for a turnaround for a while.

With some major roadblocks bulldozed from its path over the past few days, its time could be nigh, assuming the ops stay on track.

One win after another

In a feat the Socceroos will be desperate to replicate against the odds at the World Cup in Qatar, Regis has boasted two big wins in a matter of days.

The first was the news the McPhillamys project, one of Australia’s largest untapped gold reserves at over 2Moz, is finally progressing.

The New South Wales Department of Planning and Environment has decided it is approvable with conditions, flicking it through to the Independent Planning Commission of NSW for a final determination.

The DPE thinks the project’s development, stuck for years in an approvals quagmire, is in the public interest “subject to the strict conditions of consent”.

Secondly, we have a bi-annual exploration update of its WA gold projects today, including the 100% owned Duketon North and South and the 30% stake in AngloGold’s (ASX:AGG) Tropicana gold mine.

There are some pretty good results there, including high grade and visible gold at the Rosemont Underground at Duketon which is, in Regis’ book at least, “growing faster than expected”.

There are some pretty good results also at the Boston Shaker and Tropicana underground as well as life extension potential via the Commonwealth infill drilling at Duketon North.

An underground decline has also been started at the Garden Well mine, where 30,000m of drilling from beneath the surface is planned.

“Our ongoing investment in our under-explored assets continues to deliver exciting results,” Regis MD Jim Beyer said.

“Underground drilling at both Duketon and Tropicana is delivering on and in some cases exceeding our high expectations.

“These results support our view that our underground mines have lives well in excess of current Reserves. This combined with the increasing understanding of the potential in our early stage exploration projects leaves us every excited about what our dominant positions on such highly prospective greenstone belts could deliver us.”

Investment bank RBC has long held Regis as one of its top gold picks, and described the exploration upfate as “particularly strong”.

“We currently forecast Duketon South falling from 305koz in FY24e to 169koz in FY27. Today’s announcement should help boost market confidence in Duketon’s medium-term ore sources,” analyst Alex Barkley said.

“This has been a key market concern for RRL along with uncertainty at the McPhillamys project, which last week received NSW DPE approval.

“We believe the RRL stock positives from easing market concerns are combined with high upgrade potential we see stemming from today’s exploration result. We maintain our Outperform recommendation. RRL is our top pick among mid-tier gold miners.”

Regis Resources (ASX:RRL) share price today:

Kin Mining with the finger wag

The NBA has been back a couple weeks and a move from a gold explorer has us reminiscing about one of the greats.

Remember Dikembe Mutombo? Born in Kinshasa, the defensive legend lit up the biggest basketball league on Earth with his powerful blocks and iconic finger wag celebration.

(An aside: He was also the centrepiece of one of the greatest guerilla marketing campaigns of all time, a 16-bit game produced by Old Spice called Dikembe Mutombo’s 4 1/2 Weeks to Save the World back in 2012 when we all thought the Mayan calendar had our numbers up.)

With a finger wag of their own today is Kin Mining (ASX:KIN), which along with its biggest shareholder, German insto Delphi, has built a more than 10% stake in Dacian Gold (ASX:DCN).

The on-market purchase of almost 90m shares takes Kin’s stake to 7.34%, alongside Delphi’s 3.22% stake.

It means Genesis Minerals (ASX:GMD), the majority owner of Mount Morgans gold mine owner Dacian with around 76% acceptance for its off-market takeover bid at last report, is unable to get across the 90% compulsory acquisition threshold without dealing with Kin.

Potentially that gives Kin, which dumped plans to develop a standalone gold mine and processing plant in the Leonora district a few years ago, a seat at the table in the region’s consolidation talks.

So far five companies with big resource bases have been drawn into the action via sideline chats or actual moves, including Gwalia gold mine owner St Barbara (ASX:SBM), King of the Hills operator Red 5 (ASX:RED), plus Dacian, Genesis and Kin.

The Mt Morgans plant is around 87km from Kin’s Cardinia Mining Centre, and the junior says it has 100,000oz of resources ready to dig, approvals for another 100,000oz pending and applications to get another 200,000oz mine ready due to be submitted this quarter.

“While Kin continues to build its Mineral Resources through exploration to support a stand-alone processing facility, we continue to evaluate all early, low capital cost opportunities to monetise parts of our resource base, if this makes commercial sense,” Kin MD Andrew Munckton said.

“Approximately half of our 1.4Moz Mineral Resource, which is predominantly oxide and transitional material, is best suited to the conventional grind and leach processing technology offered by Mt Morgans and other processing facilities located within our sphere of influence.

“Kin’s fresh sulphide ores are optimally suited to flotation and concentrate fine grinding prior to leaching, however these sulphide ores still perform acceptably through conventional processing in the absence of a suitable flotation and fine grinding facility.”