Regis Resources has flagged one of the biggest impairments to hit the local gold sector in many years, capping a horror year for the erstwhile market darling.
And in a sign the notoriously low-profile gold producer is trying to shake its status as a lone player in a tight-knit sector, Regis said yesterday it had joined the Gold Royalties Response Group because “it’s important to stand up” for the industry.
Regis managing director Mark Clark yesterday would not discuss the company’s impairment warning or its June quarterly report, which showed group production of 65,747 ounces at a pre-royalty cash cost of $1010/oz.
Regis’ full-year output across its three mines north of Laverton was 270,759oz.
In a statement, Regis warned it was likely to book a pre-tax charge of $230 million to $280 million when it hands down its full-year result in September. It flagged an unaudited pre-tax profit of $79 million, which means it will report a full-year loss once the impairments are factored in.
The likely impairments would include a charge of $150 million to $190 million for its Garden Well and Rosemount mines, where flooding in February compounded operational problems that included below-budget gold grades.
The company has also taken the knife to the value of regional exploration around the broader Duketon area, with a $20 million to $25 million charge.
Regis said it also expected to wipe $60 million to $65 million off the book value of the McPhillamys gold project in NSW, which it acquired for $157 million in shares almost two years ago.
The company cited a 20 per cent fall in the gold price since then that meant McPhillamys’ development, while “viable at the current price” if infrastructure requirements such as water supplies could be secured, no longer met Regis’ investment hurdles.
It has axed plans for a feasibility study for McPhillamys but said it retained faith in the project’s 2.5 million-ounce resource.
The Nick Giorgetta-chaired Regis shares eased 0.5¢ to $1.80.
Less than two years ago the stock was worth $5.87 and Regis the toast of investors because of its ability to bring the Laverton projects into production and management’s well-earned reputation as among the industry’s best operators.