I'll stand corrected a bit. It has been a while since I looked...

I'll stand corrected a bit. It has been a while since I looked much into Regis's books and thought you were referring to their AISC. (Regis advertise this as $2119/oz)

With DFS on the way and trading halted until Tuesday and gold prices breaking out, thought it would be interesting to do a roughie on RRL ignoring McPhillamys. Also both Duketon and Tropicana have good reserve lifes ahead of them yet, with exploration and development likely to extend further.

Last half RRL had 90M free cash flow if we strip out the impact of hedging which is now gone. They produced 220,000koz in line with guidance and had AIC costs of about $2450/oz so yes it is almost $1k margin per ounce. Also worth noting their capital expenditure for last half was also about half their full year guidance. I would expect the 2nd half to of FY to perform similar in terms of production/expenditure if we ignore McPhillamys for a minute)

($631M Revenue @spot, 211koz sales, $541M in costs, Average spot price for half Yr = $2990/oz)

Regis actually produced 220,000oz during the half, so if all production for the half was sold its actually 117M free cash flow. Annualise it to 234M. At a share price of $1.80 (taking recent gold run out) Market cap of 1.36B (755M shares on issue) we were trading at a price to free cashflow ratio of 5.8.

Ignoring the potential for any multiple expansion (which i think is a solid case for). And assuming costs for 2H similar to 1H we should be somewhere near the below for given gold prices

$3000 - $234M FCF - $1.80
$3200 - $326M FCF - $2.50
$3300 - $370M FCF - $2.84
$3400 - $414M FCF - $3.18
$3600 - $251M FCF - $3.86
$4000 - $678M FCF - $5.21

Now McPhillamys should be an investment that is has a positive NPV so I would expect it to be positive for the company, not negative. Although it is tricky to determine how much is currently priced into it, but a FCF multiple of less than 6 is still cheap. If the market generally determines gold miners are with a higher multiple then not hard to see where we end up. I've tried to take a very conservative estimate, but also haven't factored in any increases in costs. Hoping any cost increase will be absorbed by the market in terms of a slightly higher multiple given current gold prices.