Gold

Ramelius blames gold production downgrade on weather, shares dip to 2-year lows

Thu 23 Jun 22, 10:26am (AEST)
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Key Points

  • Ramelius has revised its FY22 guidance range down by 5,000 oz
  • Persistent rain, staff shortages and lower than forecast grades weighed on its outlook
  • Cost guidance remains unchanged, but likely at the higher end

Ramelius Resources (ASX: RMS) is the latest WA-based miner to fall victim to heavy rainfall and covid-related labour shortages.

The mid-tier gold miner has been hit from all angles, including persistent rain affecting haulage routes to Mt Magnet and Edna May operations, ongoing staff shortages and lower than forecast grades from the Tampia gold mine.

Ramelius expects to miss its FY22 gold production guidance range of 260,000 to 265,000 oz and revised it down to 255,000 to 260,000 oz.

The downgrade represents a -4.5% to -6.3% decline compared to FY21 production of 272,109 oz at an all-in sustaining cost (AISC) of A$1,317.

Ramelius said that it is currently too early to provide a ‘definitive view’ on AISC for FY22. It chose to stick to its previous guidance of $1,475 to $1,525/oz but flagged costs will likely be at the higher end of the guidance range.

Brace for a tough reporting season

FY22 is expected to be a sharp U-turn from the record setting FY21.

Ramelius set new records across the board last year, including records for production, revenue, net profit and dividends.

With gold prices going nowhere in the last two years, a weaker gold production guidance and costs skewed towards the upside, investors should brace for a tough August reporting season.

Ramelius shares have been moving in-line with the negative news, down -35% year-to-date and -40% in the last 12-months.

Ramelius share price chart
Ramelius price chart vs. Gold spot in Australian dollars (Source: TradingView)

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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