Commodities | 1:22 PM
Analysts are impressed by an ambitious five-year plan issued by Ramelius Resources. FY26 marks the low point of ongoing gold production, according to management.
- Ramelius Resources’ quarterly, guidance and 5-year plan
- Management is targeting a 170% increase on FY26 production guidance by FY30
- Clever acquisitions and operational excellence receive thumbs up from sector analysts
- Ramelius considered the standout ASX-listed gold producer
By Mark Woodruff
In a busy period for Western Australian mid-tier gold producer Ramelius Resources ((RMS)), management has released first quarter results, first-time guidance for FY26 production, plus an updated five-year plan.
In an investor presentation, “5-Year Growth Pathway to +500koz”, the company outlines a roadmap to become a 525,000oz per annum gold producer by FY30, an increase of around 170% from the 185,000-205,000oz guided for FY26.
This would position Ramelius as the third-largest ASX-listed gold producer, after Newmont Corp ((NEM)) and Northern Star Resources ((NST)).
The path to 500koz is driven by organic growth: expanding the Mt Magnet processing hub to accommodate more ore (from Dalgaranga, Cue, Penny, etc.) and developing the new Rebecca-Roe operation.
UBS points out gold sector M&A is typically driven by the need to replenish reserves given many producers are now ex-growth. In contrast, Ramelius offers sector-leading growth potential through the expansion of Mt Magnet, the ramp-up of Dalgaranga, and the delivery of Rebecca-Roe.
A crucial pillar of the plan is that all major projects and expansions are funded from internal resources, with no need for new equity or debt.
Management expects an average all-in sustaining cost (AISC) of around -$1,975/oz from FY26-30, which would make Ramelius one of the lowest-cost mid-tier producers in Australia.
After FY30, once the largest growth capital is spent and higher-grade ore streams dominate, AISC is expected to trend even lower.
Along with FY26 guidance for 185,000-205,000oz, management is targeting an all-in sustaining cost (ASIC) ranging from -$1,700-$1,900/oz. Both targets are broadly in line with prior consensus forecasts, according to Canaccord.
Morgans considers production of 55koz of gold in the first quarter of FY26 is solid, though lower grades at Cue lift unit costs in the short term to -$1,836/oz.
Both production and AISC guidance were in line with the analyst’s forecasts, yet unit costs sit around 10% above consensus, representing a modest 'miss' for the quarterly.
Morgans views Ramelius as the standout gold producer on the ASX, uniquely positioned to deliver both strong earnings and consistent growth; two qualities rarely seen together in the sector.
Management expects FY26 to mark the trough year for production under the new plan.
Free cash flow
UBS highlights strong free cash flow (FCF) generation has been a consistent feature of Ramelius in recent years, significantly strengthening the company’s balance sheet.
Ramelius finished the September quarter with cash and gold of $827.7m, leaving it fully funded to execute on its growth plan, notes Shaw and Partners.
Looking ahead to FY27, Canaccord Genuity forecasts free cash flow of $488m, which, on its estimates, indicates the mine plan is fully funded through existing cash and ongoing operational cash generation.
Macquarie agrees with this assessment, anticipating positive FCF to resume in FY27.
The updated plan does not explicitly quantify dividend targets, but this broker notes the intention to continue paying out dividends (and potentially conducting share buybacks) alongside funding growth.
By FY30, once the expansions are complete, annual free cash flows greater than $1.0bn (pre-tax) at the assumed gold price are forecast, enabling substantial potential for dividends or buybacks.
Management estimates total growth capital expenditure of approximately -$1.1bn over the next five years, broadly consistent with Macquarie’s forecast but around -32% lower than the prior consensus expectation.
Canaccord describes the plan as sensible and well-sequenced, prioritising high-grade ore and delivering higher production and free cash flow over the medium term relative to prior expectations. This broker adds it also provides Ramelius with considerable long-term optionality.
The board has stated that as free cash flow grows, “shareholder returns in the form of dividends and/or share buybacks” will grow commensurately.
The Ramelius business and 5-year plan
The company’s production is organised around two regional hubs in Western Australia: the Mt Magnet mine in the Murchison Region and the Edna May operation in the Wheatbelt Region.
Producing well over half of group output, the operations at Mt Magnet include a central processing plant and numerous open-pit and underground mines on the Mt Magnet goldfield.
Under the new plan, management aims to expand this processing plant to around 5Mtpa by FY28 from 2Mtpa, targeting an initial throughput rate of 4.3Mtpa sustained from FY28 through FY35.
Stage two of the upgrade will see the company establish a new circa 3Mtpa plant at Mt Magnet.
Edna May consists of an open pit mine and processing plant with an underground component beneath the main pit. These operations were a key contributor in past years, but it is a lower-grade operation and is gradually becoming a smaller part of Ramelius’ future plans.
These plans involved a significantly expanded portfolio through acquisitions over the past two years. Indeed, Shaw and Partners points to clever acquisitions and operational excellence, positioning Ramelius for transformation into a business producing over 500,000oz per year.
Providing the technical and economic basis for planned gold output, the five-year plan incorporates the results of the Mt Magnet-Dalgaranga Integration Study (IS), the Rebecca-Roe Definitive Feasibility Study (DFS), and the Never Never Pre-Feasibility Study (PFS).
Obtained as part of the 2025 Spartan Resources acquisition (completed in July), Dalgaranga is about 65km from Mt Magnet and comes with its own 2.5Mtpa processing facility. Rather than restart the standalone plant, Ramelius’ strategy is to haul Dalgaranga ore to an expanded Mt Magnet mill, leveraging economies of scale.
UBS highlights the additional trucking cost is more than offset by lower capital and operating costs.
Over 2021-23, Apollo Consolidated and Breaker Resources were also acquired. These businesses formerly owned the Lake Rebecca and Lake Roe (Bombora) gold projects respectively in the Eastern Goldfields. The two deposits are now collectively termed the “Rebecca-Roe” project.
Following completion of the Mt Magnet plant upgrade, construction of the Rebecca-Roe processing plant and associated infrastructure is scheduled to begin in the December quarter of 2027, with completion targeted for the December quarter of 2028.
Alongside acquisitions, management’s exploration efforts have been targeting reserve replacement and new discoveries. This has resulted in significant reserve additions including Penny, Eridanus, and Never Never.
Analysts at Canaccord explain Never Never is expected to enter commercial production in FY27 and ramp up to a steady-state mining rate of around 1Mtpa in FY28, coinciding with completion of the upgraded and reconfigured Mt Magnet plant.
In FY29, Ramelius is targeting first gold production from the Rebecca-Roe Project in the Eastern Goldfields.
The Rebecca mine and new processing plant are scheduled to come online during FY29 (likely mid-year), adding a new stream of output. Coupled with the fully ramped 5 Mtpa Mt Magnet hub, this brings group production close to the half-million-ounce mark.
By FY30, management projects annual output will exceed 500,000oz, with an approximate rate of 525,000oz/year from that point onwards.
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