Ramelius Resources slips after hitting annual results

Shares of Ramelius Resources fell more than 7% on Monday after the gold miner reported a hit of up to $84.7 million on its annual results to be released within a week.

The Mark Zeptner-led gold miner said it would recognize a write-down in the value of its Edna May operation worth $90-95 million, record a gain of $30.3 million on the sale of its Kathleen Valley lithium royalty and would record a gain of $18 to $20 million. write-off of exploration and other minor assets.

Collectively, the one-time items represent a net pre-tax expense of $77.7 to $84.7 million.

On the back of non-cash items, the company said it expected to post pretax net income of $20 million to $25 million for the full year, up from $174.7 million a year earlier.

The company said the writedown at Edna May was linked to high input costs across the mining industry, coupled with lower ore grades than modeled at its Tampia satellite open pit mine.

“Significantly, Edna May’s cash flow modeling does not include the Stage 3 reduction as project studies are still ongoing and the final investment decision has been deferred until the end of this calendar year,” Ramelius said in a statement.

It also noted that an impairment assessment of its Mt Magnet asset revealed no issues.

The company warned that the updated guidelines remain subject to external audit and have not yet been approved by the company’s board.

RBC Capital Markets analyst Alex Barkley said while the downgrade might just make a lower valuation official in an accounting sense, the depreciation of Edna May’s hub would still be 59% of the site’s $156 million valuation. dollars from the bank.

“We think the economics of Edna May’s Stage 3 reduction can also be questioned,” he said.

“Today’s impairment, along with the surprisingly higher full-year 2023 cost forecast and the risks associated with Edna May’s pit expansion, all point to potential margin difficulties at Edna May. “

Shares of Ramelius closed 7¢ to 90¢ on Monday.

Comments are closed.