Ramelius Resources celebrates golden year

The 2024 financial year was big for Ramelius Resources (ASX: RMS), with the company posting record annual gold production across its operations and beginning mining at its newly acquired Cue project in WA.

Leading Australian mid-tier gold miner and ASX300-listed company Ramelius operates two processing hubs in WA, Mt Magnet in the Murchison region and Edna May near the town of Westonia in the Wheatbelt.

These processing hubs are fed with ore from nearby mines — Penny, Eridanus and Mt Magnet — while the company also owns development projects at Cue near Mt Magnet and Rebecca-Roe which lies east of Kalgoorlie in WA.

The Australian Mining Review speaks with Ramelius Resources managing director and chief executive Mark Zeptner about these achievements and what FY25 and beyond looks like for this gold mining company.

Record annual gold production in FY24

In FY24, Ramelius achieved gold production of 293koz, which it credits to increasing contribution from Penny, improved grades from the Eridanus mine (which is part of Mt Magnet) and increased throughput and grades at Edna May.

“Record annual gold production in FY24 reflected the ongoing targeted investment Ramelius has made in both organic and acquisitive growth over the past decade,” Mr Zeptner said.

“While we were aided by a rising gold price, an increased contribution from Penny and improved grades at the Eridanus open pit at Mt Magnet drove a 16% reduction in all-in sustaining cost (AISC) for the year and contributed to an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 52% which compares favourably to peers in the sector.”

Not only did the company achieve record gold production, but it also delivered a record net profit after tax of $216.6m, up 252% from the $61.6m tabled in the prior corresponding period (pcp).

EBITDA increased 76% from FY23 to $451.3m, revenue was up 40% to $882.6m and underlying net profit after tax was $200.3m, 166% higher than the pcp.

“Net profit after tax of $216.6m was a record, as was the $454.8m in cashflow from operations, which put us in a position to declare a record fully franked dividend of 5¢ per share,” Mr Zeptner said.

Beginning mining at Cue

After acquiring Cue through the takeover of Musgrave Minerals in late 2023, Ramelius began pre-strip and development activities at the project in June 2024, with the first blast taking place in July.

Ramelius anticipates first ore to be delivered from Cue in the December 2024 quarter, with high grade zones expected to be reached early in the March 2025 quarter.

While it’s expected that ore tonnes mined will decrease in the September 2024 quarter as the open pit mining fleet mobilises to Cue to begin the pre-strip work, mined grades are set to increase due to the presence of higher-grade ore.

“Cue represents another high-grade source of feed for the Mt Magnet mill, complementing the exceptionally high-grade ore from our Penny mine,” Mr Zeptner said.

“As tonnages from Cue are brought into the mine plan and with the expectation of higher grades from Penny, we expect them to contribute to a further decrease in AISC at Mt Magnet in FY25.”

In July 2023, Ramelius announced it had entered a bid implementation agreement with Musgrave to acquire all the issued ordinary shares in the latter, by way of a cash and scrip off-market takeover offer.

Shareholders received one Ramelius share for every 4.21 Musgrave shares held and 0.04¢ in cash for every Musgrave share held, valuing Musgrave at around $201m.

“Subject to the offer being successful, Ramelius is looking forward to continuing drilling across the tenement package to expand the existing resource and ultimately developing the Cue project into a high-grade satellite mine for the Mt Magnet production centre,” Mr Zeptner said at the time of the acquisition.

Mt Magnet 10-year mine plan

Since mining began at Mt Magnet in 1891, over 6moz of gold has been produced from the field, but there remains significant potential to host new discoveries.

Over the next 10 years, Ramelius expects gold production to exceed 1.5moz with average gold production of around 150kozpa at an AISC of $1700oz.

In the next 3.5 years, the AISC will average to $1350oz.

The mine plan was based upon production targets and mineral resource updates from Ramelius’ operations, particularly Penny, Cue and Eridanus.

“At the start of September, we published our reserves and resources statement for 2024 in which total mineral resources were estimated at 180mt at 1.5g/t gold for 8.7moz and total ore reserves were estimated at 20mt for 1.6g/t gold for 1.1moz,” Mr Zeptner said.

“Resources at Mt Magnet were estimated at 65mt at 1.7g/t gold for 3.5moz, and importantly, there are two large resources (Rebecca-Roe and Eridanus) that are subject to conversion to reserves during FY25.”

As well as increasing production at Mt Magnet, this 10-year plan enables Ramelius to focus on its sustainability.

“Our long-term mine plan at Mt Magnet enables us to invest with confidence in sustainable energy solutions with our first priority being solar power generation and a long-term aspiration to transition to wind power once studies are complete,” Mr Zeptner said.

“In August, we signed a power purchase agreement with PWR Hybrid for hybrid energy supply at Mt Magnet.

“PWR will deliver a 32MW hybrid power station comprising of 14MW of gas generation, 3MW of diesel generation, 6.7MWp (megawatt peak) solar photovoltaic and 8MW/h – 10MW/h battery energy storage.

“The agreement also accommodates the addition of 8.4MW of wind generation or a 6.7MWp expansion of solar photovoltaic.”

This 10-year plan runs from H2 FY24 until FY34 and it’s expected to generate $1.7b in cashflow at a $3000oz gold price for Ramelius over the entire period, with $1b coming in the 3.5 years.

Future outlook

Ramelius will be handing down its prefeasibility study for the Rebecca-Roe project in the December quarter, plus it will deliver an updated study for Eridanus which will determine if it goes ahead with a larger open pit and potentially a mill upgrade or pursues an underground operation.

For FY25, Ramelius has issued production guidance of between 270koz to 300koz at an AISC of $1500oz – $1700oz.

Pleasingly for the company, this is higher than the three-year production outlook released in November 2022 of 250koz to 290koz, due to additional production from Edna May.

Mt Magnet is set to contribute up to 250koz of that amount, representing a 50% increase from FY24 which Ramelius attributes to improving grades and increasing tonnages at Penny, plus the higher-grade open pit ore to be sourced from Cue.

FY25 production from Edna May is expected to be between 40koz to 50koz at an AISC of $2500oz – $2700oz.

“FY24 was a record year for Ramelius in relation to gold production, cash generation and earnings, and it’s pleasing to be able to follow this up with such strong guidance for FY25,” Mr Zeptner said.

“Our disciplined and focused acquisitions over the last few years now support the Mt Magnet operations with production there expected to increase 50% to around 240koz.

“As we look forward, the development of the Cue open pit mine will provide higher grade ore and we will also see increased production from Penny as grades and tonnages there increase.”