Yes agree, costs are at a short term peak due to the development that has taken place recently. I think a few posters just pick the most recent AISC data point and extrapolate rather than looking at how the mine plan dictates the costs.
Even saying that I still feel like the deal price is on the high side, perhaps $100-200M over. It just doesn’t feel right for Regis either given where Mcphillamys is at. On the conference call they seemed to say they can fund the $400M capex (my guess - it’s been inching up from 300 in each conference call in the last 12 months) from the expanded company cashflow but that seems a bit dubious. The dividend may even have to drop from the 4c per half (4c wasn’t particularly welcomed either when it was dropped to that a few months ago). Duketon costs have risen considerably in recent years so it’s more exposed to the gold price.
Given that Regis has traditionally attracted yield focussed investors I feel like the share price is going to be under sustained pressure from their potential exit.
RRL Price at posting:
$2.72 Sentiment: Hold Disclosure: Held
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