Regis Resources (ASX:RRL) has withdrawn the outcomes of the McPhillamys Gold Project Definitive Feasibility Study (DFS) following the recent Section 10 declaration over part of the project.
The company says the decision has been made as a result of the failure of a key project assumption, being the satisfactory resolution to the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 Section 10 application.
Despite achieving a record operating cash flow of $475 million for financial year 2024, a non-cash impairment of $192 million has been taken against a significant portion of the carrying value of McPhillamys.
While shares moved a little higher after open this morning (22 August), they were down about 0.6% to $1.725 just before 12pm AEST.
Regis has also withdrawn previous reported ore reserves of 1.89 million ounces. The resource estimate remains valid and unchanged.
As previously reported, the Federal Minister for the Environment, Tanya Plibersek, partially upheld a Section 10 objection under the heritage protection act, which prohibits any conduct that will, or is likely to, injure or desecrate the declared area.
Regis Resources, which has a market capitalisation of $1.27 billion, says this outcome has impacted its ability to construct and use the planned Tailings Storage Facility (TSF) area. As a result, the DFS outcomes can no longer be relied upon by investors when making an investment decision.
CEO Jim Beyer says following Plibersek’s declaration, the company has begun an assessment of the impacts on the economic value of the business.
“The Section 10 declaration has resulted in the loss of planned access to the TSF area,” Beyer says.
“This has made the project in its current form unviable. To advance any form of realistic and approvable alternative TSF solution requires further extensive investigations and studies along with the restart of the state and federal approvals processes.
“This could take between five to 10 years, with no certainty of a viable alternative being realised. With this context, some regrettable but prudent actions are necessary. These include writing down the value of the McPhillamys asset along with removing relevant ore reserves from our reporting.”
McPhillamys’ expenditure guidance for the financial year 2025 is currently under review.
Beyer notes that the financial year 2024 results reflect major events for the company, including the negative impact of the McPhillamys impairment and the end of the hedge book.
“The business is now hedge free and fully leveraged to the gold price,” he says.
“Our timing on closing the hedge book has also delivered additional value. In December, we closed the remaining hedge book out at a cost of $3,121 per ounce and since then, the average gold price has been $3,325 per ounce with an upward trend.”
As of this morning, the gold price is currently sitting at around $3,730 per ounce, according to ABC Bullion.
Regis Resources is an Australian gold producer and explorer focused on its assets in Western Australia.
The McPhillamys Project was set to be an 11-year open-cut mining operation that lies in the Blayneys-Kings Plains district of New South Wales.
Write to Aaliyah Rogan at Mining.com.au
Images: Regis Resources, ASX
