Regis Resources battered after production forecasts cut

Regis Resources shares took a hit on Monday as the company became the latest miner to cut production guidance and lift cost expectations.

Regis Resources shares took a hit on Monday as the miner cut production guidance and lifted cost expectations.

Regis shares closed down more than 11 per cent after it said a wet March quarter had added to operational challenges and inflationary pressures, with the miner producing 103,728 ounces of gold for the period, less that expected.

The company narrowed its output forecast to 450,000 to 470,000 ounces for the full financial year, shaving the top end of expectations from 500,000 ­ounces.

Full year all-in-sustaining costs would lift to $1795-$1845 per ounce for the year, up from its previous estimate of $1525-$1625 per ounce, the company said. But cash generation was the major cause of market concerns, with Regis adding only $53m to its cash and bullion balance in the quarter.

While Regis boss Jim Beyer said the company was nearing the end of a capital spending program at its Tropicana and Duketon mines, it has also flagged a final investment decision on its McPhillamys gold mine in NSW by the end of the year.

McPhillamys received final approval from the NSW independent planning commission in late March, after sitting in Regis’s development pipeline for more than a decade.

While the company is still to update its feasibility studies on the project, Mr Beyer flagged capital costs of more than $500m at an investor call in March, with the market now closely watching Regis cash generation ahead of a final investment decision for signs it may need to raise fresh capital.

Mr Beyer told shareholders on Monday the company expected to enter a “cash build phase” over the current and following ­quarters.

While Regis shares took a beating, it was not the only Australian gold company hit on Monday, with the sector trading down after falls in the gold price.

Last week gold traded within $US30 of its 2020 record high of about $US2070 an ounce, but briefly dipped below $US2000 an ounce on Monday before recovering to levels around $US2012.

Regis shares closed down 27c, or 11.2 per cent, to $2.15.

Northern Star Resources shares were down 36c to $14.04, with Newcrest Mining off 2.3 per cent to $29.28.

Silver Lake Resources fell 4.9 per cent to $1.265 and Evolution Mining slipped 8c, or 2.2 per cent, to $3.56.