Ramelius Resources (ASX: RMS) continues to top itself with two new projects coming online in 2021 and record-breaking results in FY20.
This comes off the back of two successful operational start-ups in FY20 at the Marda gold project, where a total of 449kt was mined at a grade of 1.78g/t for 25,656oz of contained gold, and the Greenfinch open pit at the Edna May gold mine, with a total of 117kt mined at a grade of 0.89g/t for 3380oz of contained gold.
Wrapping up FY20, the company produced 230,426oz of gold, spent $19.8m on exploration and delivered a $113.4m profit after tax, a 420% improvement on the year before.
Ramelius exceeded production guidance in the June and September 2020 quarters and went on to make a further announcement in November that its Penny gold project would begin mining ahead of schedule in the June 2021 quarter, with lower operating costs of $633/oz.
The Penny gold project is a high-grade undeveloped gold asset acquired as part of the company’s friendly $200m takeover of Spectrum Metals in June this year.
The other new mining projects coming online around July 2021 is the Tampia gold project in Narembeen, WA, in which Ramelius holds a 90% share along with a 10% minority holder.
Tampia was acquired via the takeover of Explaurum Limited in late 2018 and early 2019.
The company reached a market capitalisation of $1.6b this year and was subsequently included in the S&P/ASX200.
Ramelius Resources managing director and chief executive Mark Zeptner says several fundamentals have underpinned the success of the company’s operations.
“We have a highly skilled and committed operations team that has been reaching targets and delivering on what we said we were going to do on a regular basis,” he said.
“This is important because the market builds trust and it can rely on your forecasts and your production guidance.
“The team also has a tight control on costs, and over an extended period of time, we’ve shown that we can operate in a relatively tight all-in-sustaining-cost of only $1150-$1200/oz.
“As gold prices have gone up over the journey it has led to an increase in margins, and in FY20 we were again in that similar range, with $1,164 being our AISC.
“We target high grade ore bodies both internally and as part of our acquisitions wherever we can because we understand that these are the ones that tend to give you the nice uplift or performance.”
Ramelius Resources is a WA gold producer that has been listed on the ASX since 2003 and in production since 2006.
This is the sixth consecutive year the group’s AISC has been below $1200/oz.
It operates the Mt Magnet, Vivien, Edna May and Marda gold mines and associated plants around WA.
Production guidance for FY21 has been set at 260,000-280,000oz, which will be another record year for Ramelius if achieved.
An updated life-of-mine plan, released at the end of June, identified 1.45moz of gold and detailed annual gold production averaging over 250,000ozpa out to FY25.
This represents a 25% increase in the average annual production and an extension of two years on the prior year’s life of mine plan.
Ramelius is on the lookout for a third production centre to complement the Mt Magnet and Edna May centres.
“Our mission is to be a sustainable gold producer that delivers superior returns for stakeholders,” Mr Zeptner said.
“That’s pretty broad but if you look at our strategy, it is to grow our company to be a +300,000oz gold producer.
“When we first started, we were an 80,000-120,000oz gold producer and we recognised that that was really a road to nowhere.
“Looking at the larger period, we recognised the need to grow to that minimum production level and at the time we figured that that would take three 100,000ozpa assets.
“We had one at Mt Magnet and we grew throughout our position in 2017 with Edna May to have two production assets.
“To fulfill the + 300,000oz strategy, we’re on the lookout for a third asset, and the search continues, recognising that with record gold prices those assets will be ever more expensive, which means more due diligence.”
Mt Magnet, the first production centre, was started up in 2012 and contains the Checkers gold mill, a 1.9mtpa conventional semi autogenous grinding (SAG) gold mill servicing the Cosmos and Galaxy mine areas and soon to be online Penny gold project.
Studies are currently underway by Ramelius to expand the plant capacity to 2.4mtpa.
Edna May, the second production centre, was purchased in 2017 from Evolution Mining (ASX: EVN) with its 2.9mtpa conventional carbon-in-leach (CIL) gold plant right next to the town of Westonia, WA.
“In terms of projects that are more near-term and are part of our current mine plan, we have the Penny project, which is about 150km south of Mt Magnet, that will be trucked to Mt Magnet,” Mr Zeptner said.
“That’s planned to come into production in FY22 but we’ll be on the ground starting mining next year.
“Further to the south and more in the Wheatbelt, we have the Tampia project which will be trucked into the Edna May facility, which is about 140km south of Edna May.
“That’s planned to come online a little earlier than Penny, with on-the-ground activities in the new year in 2021 and planned production at the start of the 2022 year, which is July next year.
“So we’ve got two new projects that we’re building that will come in to the current production centres.”
Mr Zeptner credits the operational and financial achievements of the past year to Ramelius staff and contractors, who he says navigated the uncertainty of the COVID-19 pandemic with aplomb.
The company also went through challenging times between 2012-2015 when the gold price was around $1400/oz.
“There are a number of team members who are still with us today and they understand what it is like to operate in a much lower gold price environment, the necessity around a really lean operation, using only the resources that are absolutely required,” Mr Zeptner said.
“As we’ve become better operators and more experienced with the assets, we’ve also benefitted from an increase in gold price.
“Maintaining a discipline around costs is a key fundamental, as well as being good operators, whether it be running an underground or an open pit mine or the processing plant.
“It’s important wherever possible to not run with overheads that are unsustainable.
“As we’ve become bigger, and more recently into the ASX200, we recognise the requirements especially in the area of ESG, additional resources, process and reporting that we wouldn’t have been required to do back when we started.”