Regis Resources investors are pressing management over whether it would return to paying dividends, with the development of its McPhillamys goldmining project in NSW looking off the agenda for now.
After Regis Resources closed out its gold hedge book about 10 months ago and with the record gold price this year, the company is generating about $280m of cash annually. Although it is cash-rich, its production pipeline will fall sharply in the future.
The debate is whether it keeps the cash to buy growth through mergers and acquisitions, or whether it returns the cash to investors by way of dividend payments or a share buyback.
The stock of the $1.5bn miner has halved in the past five years to about $2 so, at low levels, a buyback in the current market could make sense. It would likely cause its share price to re-rate and then it could raise equity when its shares were worth more to fund M&A or development.
Regis managing director Jim Beyer was pressed on the matter recently while speaking at an event at the Sydney Mining Club.
Asked if the company would consider returning a dividend to shareholders, he said the board was constantly considering dividends or capital management.
In the future, Regis will need funding for its Duketon underground mining project in Western Australia, for which the company said it had several projects at various stages of consideration across Duketon as potential feed sources for processing.
Meanwhile, gold production at the Tropicana mine it jointly owns in WA with AngloGold Ashanti is declining.
While it pinned its hopes on the McPhillamys project in NSW, which now looks unlikely in the near term, it faced questions as to whether the economics would stack up from a development cost perspective. It is one of Australia’s largest undeveloped gold deposits suitable for open-pit mining and Regis was due to make a final investment decision in 2025 or 2026.
Another obstacle is that federal Environment Minister Tanya Plibersek has put an Indigenous protection order over the project, overriding her own federal department and NSW planning approval for the goldmine near Blayney.
Mr Beyer earlier claimed that decision would threaten all future developments, including renewable energy, farming and housing.
There has also been speculation in the market Regis considered a deal with Gold Road Resources, which owns a stake in De Grey Mining but the talks did not result in a deal.
Regis has higher costs and skinny margins, which analysts say means it makes more money from a higher gold price.
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