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Regis defends Tropicana deal amid share drop

Regis

Regis Resources has acknowledged its share price tumble during the 2020-21 financial year (FY21) and made attributions for the decline.

According to PricewaterhouseCoopers’ (PwC) 2021 Aussie Mine report, Regis incurred a 33 per cent drop in its market capitalisation in FY21, reducing from $2.653 billion to $1.779 billion across the 12 months.

The mid-tier gold miner indicated its acquisition of IGO’s stake in the Tropicana joint venture in Western Australia may have hurt its stock.

In April, Regis purchased IGO’s 30 per cent interest in the Tropicana gold project for $903 million. AngloGold Ashanti owns the remaining 70 per cent stake in the operation.

Despite its concession, Regis defended the deal, highlighting the low cost of Tropicana positions it and its shareholders well going forward.

“As for Tropicana, we believe we paid a fair price for an exceptional asset, the accretive value of which to Regis shareholders will become increasingly evident,” Regis chairman James Mactier said.

“Tropicana is a large-scale, long-life, low-cost, well-managed, cashflow-positive mine. It is without significant legacy, execution, community or permitting risks and is located in arguably the world’s premier mining jurisdiction. Gold mines such as Tropicana are few and far between, very hard to find and rarely for sale.”

Regis also suggested its current regulatory stalemate regarding the development of its McPhillamys gold project in New South Wales may have contributed to its depreciating stock.

Regis acknowledged the significant progress that’s been made in consultation with the NSW and Commonwealth governments, but said it was still awaiting requisite approvals and that “progress remains frustratingly slow and timing uncertain.”

“It was disappointing in that, despite making considerable progress, we have not yet obtained regulatory approval for the development of McPhillamys and of course, that our share price declined very significantly,” Mactier said.

In October, Regis responded to a request for information (RFI) from the NSW Department of Planning, Industry and Environment, dated August 24 2021, regarding a social impact assessment (SIA) of McPhillamys.

No further update has been provided on the matter.

Regis’ share price was trading at $1.90 at the time of writing.

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