Regis Resources increased Mineral Resources

Regis Resources released its Mineral Resource and Ore Reserve update for the 12 months ended December 31, 2024, on May 20, 2025, reporting sustained growth across Duketon and Tropicana. Group Mineral Resources increased to 7.5moz from 6.9moz in the prior corresponding period. However, the total ore reserves decreased to 1.7moz from 3.5moz over the same period. Notwithstanding this, the group reported fifth consecutive year of underground Ore Reserves growth at Duketon, reflecting an increase of ~550% since 2019, including cumulative mining depletion.

Meanwhile, Tropicana posted underground Ore Reserve growth of ~202% net of depletion, since 2018.

Regis Resources Limited, established in 1986, is one of Australia’s largest unhedged gold producers with 100% of gold produced from Australian assets. The company operates primarily in gold exploration and production, with a focus on the Duketon Gold Project and a 30% interest in the Tropicana Gold Project. Regis Resources' business model involves mining, processing, and selling gold, with operations concentrated in Western Australia.

The Duketon Gold Project contributed 59.5% of total gold production in H1 25, while the Tropicana Gold Project contributed 40.5%. The Duketon segment produced 115,776oz of gold at an all-in sustaining cost (AISC) of AUD2,659/oz, and the Tropicana segment produced 80,025oz at an AISC of AUD1,958/oz. The company sold 197,690oz of gold unhedged at an average price of AUD3,932/oz during this period.

Solid results in quarter ending March 31, 2025

Regis Resources reported a strong performance for the quarter ending March 31, 2025. Gold production totaled 89.7koz at an AISC of AUD2,538/oz, with Duketon contributing 58.1 koz at an AISC of AUD2,753/oz and Tropicana producing 31.6 koz at an AISC of AUD2,046/oz. Financially, Regis generated AUD372m in revenue from gold sales, with an average realized price of AUD4,591/oz. Operating cash flow for the quarter was AUD221m, and the company ended the period with AUD367m in cash and bullion, reflecting a AUD138m increase before debt repayment.

Regis also made significant strides in its growth initiatives. The company repaid a AUD300m term loan facility and established a new AUD300m revolving credit facility, which remains undrawn. In addition, the Tropicana Renewable Energy Project commenced commercial production, featuring a 24MW solar farm, four 6MW wind turbines, and a 13MW battery storage system.

The group anticipates FY 25 production between 350koz and 380koz, with AISC expected between AUD2,440/oz and AUD2,740/oz. In addition, Regis Resources expects growth capital between AUD120m and AUD135m.

Rise in long-term leverage

Regis Resources reported solid top line performance over FY 19-24, posting a revenue CAGR of 14% to reach AUD1.3bn. EBITDA increased at a CAGR of 5.7% to AUD414m in FY 24, but margins contracting by 15.2% to 32.8%, impacted by a decline in gross margin performance. Net income reported minus 203% CAGR over the same period, reaching minus AUD186m in FY 24, owing to significant rise in other operating expenses in FY 24.

Cash and equivalent strengthened to AUD278m as of end-FY 24, from AUD189m as of end-FY 19, supported by healthy cash flow from operations. However, total debt jumped from AUD2.1m to AUD366m over the same period, pushing the gearing levels of the group from 0.3% to 27%.

In comparison, Northern Star Resources, a local peer, outperformed, with a revenue CAGR of 28.6% over the past five years, reaching AUD4.9bn in FY 24. EBITDA surged at a CAGR of 34% to AUD2.1bn in FY 24, with margins expanding by 8% to 42.9%.

Robust stock returns over past year

Over the past year, the company's stock has delivered staggering returns of approximately 152%, reflecting a positive fundamental trajectory. In comparison, Northern Star Resources delivered lower returns of 44%.

Despite the sharp run-up in the share prices, the company is trading lower compared to Northern Star Resources. Regis Resources is currently trading at a P/E of 15.3x, based on the FY 25 estimated EPS of AUD0.32, which is lower than that of Northern Star Resources (19.6x). However, it is trading higher than its 3-year historical average of 12.9x.

Likewise, in terms of EV/EBITDA, the company is currently trading at 4.3x, based on the FY 25 estimated EBITDA of AUD759.2m, which is lower than Northern Star Resources’ valuation of 8.8x. However, it is trading higher than its 3-year historical average of 3.2x.

Regis Resources is monitored by 12 analysts, two of whom have ‘Buy’ ratings and eight have ‘Hold’ ratings for an average target price of AUD4.5. However, the recent run-up in share prices means it has already achieved its target price, implying limited upside potential. However, any correction in the near term could provide a decent investment opportunity for investors.

The analysts’ views are further supported by an anticipated EBITDA CAGR of 27.8% over FY 24-27, reaching AUD879.2m, with margins of 50.9% in FY 27. In addition, analysts estimate a net profit CAGR of 230%, reaching AUD413m, with margins of 23.8% in FY 27, with EPS expected to increase to AUD0.66 in FY 27 from minus AUD0.25 in FY 24. Likewise, analysts estimate EBITDA CAGR of 30.2% and net profit CAGR of 50.5% for Northern Star Resources.

Overall, Regis Resources appears to be set for long-term growth, supported by solid production and development activities across Duketon and Tropicana, along with progress in the company’s underground growth projects. In addition, favorable gold prices have strengthened the group’s financial position. However, it is prone to some risks, including legal proceedings, volatility in gold prices, and environmental risks.