Is Regis a takeover target?, page-2

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smartdude

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31/03/21

20:47

Post #: 52186679
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Originally posted by Sequoia: ↑

It makes so much sense.

Mcphills is about 25 km's from Cadia Mine. Once approval for McPhills is made why wouldn't Newcrest's Cadia adopt a Ramelius strategy of acquiring mine locations within 300km of their own operating mine and truck the ore their processing site. RMS did this with SPX - Spectrum Metals. Or put another way? Why would you outlay massive coin to build an processing site when there is a perfectly good one 25km down the road, in fact one of the best processing sites in the world. RMS have done the strategy and found that 300km of hualage is viable. McPhils is 25-30km away.

I was up at Blayney where McPhils is and I found that there has been big road upgrades between the Cadia and McPhils site. I have also spoken to the Blayney council and they have never been busier in terms of DA's etc and there is a real concern that there is big shortage of land and houses on the real estate market, which indicates that the McPhils mine is a formality not speculation.

In this video, Jim Beyer reveals why they don't drill deeper in the initial stages of projects. In the interview at 17 minutes 40 seconds, Jim talks about their Rosemount mine, saying "why incur additional drilling costs at the start of a project All we need to do is prove a valuable enough resource, mine it, go down, and then make smaller length drills as the mine gets deeper. I suspect that this is the attitude they have taken with McPhils as well, And this is important for McPhils project as well.

NCM's Cadia mine which is super close, just revised its Cadia Life of Mine plan. They believe that this mine will go until 2061. This is a massive upgrade and feeds the "Why drill more in the early stages? ". So I suspect that McPhills is a much larger resource than previously indicated. NCM would know this. RRL know this, so why wouldn't RRL be attractive to NCM.

RRL is known as one of the lowest cost producers in Australia - so the attraction for NCM buy a big resource in country that NCM know exceptionally well which has its fullest potential unrealised. Buy other mining assets that are some of the cheapest to operate. Buy a hedge book which is holding back the RRL share price then incorporate it into NCM's and dilute the RRL hedge book power. Lets not forget that RRL is sitting on a silly P/E which is about 8 times when compared to other Aussie goldies that are north of 15-20 times.

Honestly - this makes a lot of sense on so many counts.

Other notes from this interview
High/Low Aussie Doller Impacts
A high Aussie dollar actually has its benefits - why - the cost of equipment (to establish a mine) lowers the higher the Aussie goes. This time in the life of Regis they needs to make a big investment to establish the mine
But a lower gold price equals higher gold price as we all know.

Expand

A sound theory but I am not sure that the scale of RRL’s assets meets the NCM criteria. They seem to desire much bigger projects. However, RRL is definitely a takeover target at the current market cap. I would not be surprised if there are some vultures working their calculators right now.

RRL Price at posting: $2.90 Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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