SMS Finance

Ramelius Resources doubles annual dividend

Ramelius Resources (ASX:RMS), amidst a robust performance in the fiscal year 2022-23 despite industry-wide cost pressures, has increased its annual dividend to 2 cents per share. The move is expected to attract more acceptances from shareholders in Musgrave Minerals, the subject of a takeover bid by Ramelius.

The Western Australia-focused mining company extracted approximately 241,000 ounces of gold in the year ending June 30, a marginal 3% decrease from the previous year. However, the All-In Sustaining Cost experienced a significant surge of 24%, reaching $1,895 per ounce.

Looking ahead, the company anticipates a rise in gold production for the upcoming year, projecting a range of 250,000 to 275,000 ounces, with a slight reduction in costs. Yet, with the integration of Musgrave Minerals’ assets into its operations, Ramelius cautioned that production and cash flow will be concentrated in the June 2024 half.

For the reported year, the company achieved a gold price of $2,591, marking an 8% increase and contributing to a 5% rise in revenue, totaling slightly over $631 million, up from $604 million the previous year.

Ramelius disclosed a statutory net profit after tax of $61.6 million compared to $12.4 million in the prior year (which saw various one-off losses). The underlying net after-tax profit also saw a 35% uptick, reaching $75.3 million from $73 million.

With net cash and bullion reaching $272.1 million as of June 30 (a 575% increase attributed to the Breaker Resources bid completion), the company doubled its annual dividend to 2 cents per share. This dividend increase is expected to strengthen its position in the ongoing takeover bid for Musgrave Minerals, which was declared unconditional on Monday.

Ramelius reported holding slightly over 47% of Musgrave Minerals through its share and cash offer, which it considers its “best and final” in the absence of a superior offer. The offer’s initial closing date is September 15, with accepting Musgrave shareholders eligible to receive the final dividend within 10 days.

Amid a backdrop of industry-wide cost pressure, Ramelius characterized FY23 as a successful year, witnessing improvements across nearly all financial metrics compared to the previous year. The high-grade Penny underground mine and a strong A$ gold price played pivotal roles in mitigating cost challenges.

Mark Zeptner, CEO of Ramelius Resources, noted, “Our business is in a very strong operational and financial position.” He emphasized the company’s focus on growth at the flagship Mt Magnet operation, including the planned acquisition of the Cue Gold Project through the takeover of Musgrave Minerals.

Zeptner highlighted the positive contribution expected from the Penny underground mine in FY24, with production and costs benefiting from its high-grade ore. While FY24 presents uncertainties due to local and global inflationary pressures, Zeptner expressed confidence in generating positive operating cash flows, supporting ongoing development across various sites.

He stated, “While FY24 continues to present some uncertainty in terms of local and global inflationary pressures, we expect both our production centers to generate positive operating cashflows, which will fund the exciting prospects we see at the Rebecca and Roe sites as well as at Mt Magnet, where the development pipeline continues to expand.”

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