Regis in the dark after federal intervention stalls 'cracker' gold mine

Regis boss Jim Beyer says McPhillamys would have been “a cracker” of a mine before federal intervention halted its progress
Project has had little value assigned by analysts due to delays and rising costs
Beyer thinks Regis’ increasingly underground-focused Duketon gold project is viewed in the wrong light

Regis Resources (ASX:RRL) boss Jim Beyer says a shock intervention from Tanya Plibersek that killed a NSW gold mine halted “a cracker” of a project.

He told a room of industry delegates at a WA Mining Club function in Perth yesterday it could take 5-10 years to identify a new tailings dam site after Pilbersek, in her role as the Albanese Government’s Environment Minister, supported an Aboriginal heritage application that the planned site would destroy a cultural site.

Despite its significant upfront costs – $996 million for 185,000ozpa over a 9.5-year mine life – Beyer thinks the mine would still be a money spinner at current gold prices.

With life of mine all-in sustaining costs of $1580/oz and Aussie dollar gold prices closing on record levels of $3900/oz, Beyer estimated the project would pull margins of upwards of $2300/oz, justifying its development.

The decision to accept the ATSIHP Act s10 application from the Wiradjyuri Traditional Owners Central West Aboriginal Corporation came as a surprise, Beyer said, because the heritage site in question, located in the headland of the Belubula River, had been considered and cleared in assessments by the NSW Government’s Independent Planning Commission and Federal regulators under the EPBC Act.

The representative land council for the region, the Orange Local Aboriginal Land Council, had not opposed the placement of the tailings dam.

“So it wasn’t an insubstantial investment, but it was going to be a cracker of a producer, producing between 187,000oz on average ramping up to 235,000 ounces towards the back end, because the grade increases with depth,” Beyer said about the McPhillamys development.

“This would be an absolute cracker of a mine, and that’s where we were heading. And then we had a Section 10 declaration declared over a particular area of the mine.”

While Plibersek at the time said she was not banning the mine, saying the company had considered other sites for its tailings dam, roughly 400 hectares of a 2500 hectare project footprint, Beyer told the room other sites considered by Regis were unsuitable.

“You can’t go and put it on top of the existing orebody, can’t put it on top of the existing waste dump, you can’t put it on top of the process plant, we can’t go to the left because there’s actually a little yellow circle there, which had been identified as being of cultural significance,” he said.

While legal options could be considered, Beyer said Regis was struggling with how to approach the process because the minister was yet to release her statement of reasons.

Also, as the president of the Association of Mining and Exploration Companies, Beyer believes the industry needs to do more to help the community understand the role mining dollars play in keeping essential services running.

The Queensland-raised executive said $74 billion of taxes came from Australian mining companies last year, enough to build Fiona Stanley Hospital in Perth 35 times over.

Focus on Duketon

With McPhillamys on the backburner from a development perspective, Beyer is now looking at how to show the market the company has a longer than expected life ahead at its Duketon and Tropicana gold mines.

While Tropicana, where Regis has a 30% share alongside global giant and operator AngloGold Ashanti, is a Tier-1 operation, the network of mines that make up its Duketon hub have been hit by rising costs and falling production as they age.

Previously large, low-grade open pits in the days when Mark Clark was running RRL, they’re now increasingly heading underground, with two more deep developments approved this year.

While the McPhillamys barely rated a mention when it came to Regis’ share price – RBC’s Alex Barkley this month said the market had been placing little value on the project because of scepticism resulting from a series of delays and downgrades – it was hit earlier this year when it disappointed with guidance.

After delivering 418,000oz of gold in FY24, RRL is guiding just 350,000-380,000oz in FY25 at all-in sustaining costs of $2440-2740/oz.

On the flipside, Regis will generate more cash than the company had previously after closing a very out of the money hedge book.

When it comes to Duketon, Beyer said there was unrecognised value in gold miners’ ability to keep adding to reserves once they go underground.

“When you’re talking with investors about underground mines in Australia, they look at the reserves and particularly the generalists and the offshore funds, they look at it and say, ‘well, you’ve only got three years of reserves, what’s the point?'” Beyer told the audience.”Well, there’s these mines all across Australia that have had three years of reserves, and they have done for the last 10 or 15 years. They just keep on replacing and replacing.

“And there is a real unrecognised value in that, and that’s part of the story that we have to sell.”

Regis holds around 92% of the ~10Moz Duketon greenstone belt, which he said was underexplored compared to larger gold fields where production has been consistent since the gold rush days like Laverton, Leonora, Kalgoorlie, and the Murchison.

“You look at the big belts, you look at the Norsemans and the Lavertons and the like … they’ve been explored for 40 or 50 years,” Beyer said.

“The Duketon Belt is a really interesting one. It really hasn’t had a real focus until probably the past 10 years or so. So we see that while the size of it may not look much, it’s actually got a huge amount of potential sitting in front of it for the exploration team.”

Regis shares rose 3.8% yesterday as gold prices stormed to a record US$2661.45/oz (A$3879/oz) on the LBMA on Wednesday night.