Regis Resources Ltd (ASX:RRL) says it will take a $192 million hit when it cancels a $1 billion gold mine near Orange in NSW that was vetoed by Environment Minister Tanya Plibersek on Indigenous heritage grounds.
A partial declaration under Section 10 of the Aboriginal and Torres Strait Islander Heritage Protection Act of 1984 has been issued to protect the headwaters of the Belubula River at Kings Plains, which was the proposed site for a tailings dam associated with the gold mine.
Regis managing director Jim Beyer said, “Following the surprising and disappointing Section 10 Declaration by the Hon. Federal Minister Plibersek last week, Regis has commenced an assessment of the impacts on the economic value of our business.
“The Section 10 Declaration has resulted in the loss of planned access to TSF area. 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 and 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 the relevant ore reserves from our reporting.
“Regis is also disappointed that the flow-on effects of the decision include the loss of significant wider benefits to the regional communities of Blayney and beyond, such as jobs, royalties and taxes.”
Community impact
The veto from Ms Plibersek came after an 11th-hour bid from a dissident Aboriginal group citing the importance of the ground to the Wiradjuri people.
Blayney mayor Scott Ferguson met with the minister to try to overturn the decision.
“She was generous with her time but she’s certainly locked in and confident with her decision,” Ferguson said. “We pointed out our disappointment that we weren’t – as a pretty important stakeholder – ever at all considered as part of her department’s review.”
The Blayney community will be hardest hit.
Regis asserts that the approved project had the potential to create approximately 580 full-time construction jobs and around 290 full-time jobs during production.
For the New South Wales Government, the Federal decision could result in a potential loss of A$200 million in royalties.
Grazier Ross Wills, who has farmed the land proposed for the tailings dam for nearly 20 years, claims he has never been contacted by the traditional owners during that time.
“I’d be highly surprised if anyone ever considered this as a culturally sensitive area,” he said. “A small percentage of the community don’t want to see it go ahead.”
Wills, who sold the land to Regis has been maintaining the ground, however, he is now “up in the air” about whether to keep grazing the land.
“We’ve tried to sort of maintain it because, although it’s not our assets, it’s sort of the mine’s asset and we try to do the right thing by them,” he said.
A report by The Australian notes others impacted include butcher Tanya Cassel and her husband, who set up shop in Blayney eight years ago in the belief the gold mine would positively impact their business.
“We paid more than what we would have liked to but we knew the mine was setting up soon, and thought lots of business would come along with that,” Ms Cassel told The Australian. “The mine was obviously going to be fundamental for town growth and employment.”
Sharon Kearney said, “As a small business we need to be able to survive and keep going – putting industry and infrastructure into the town is what is going to make it grow.”
Record operating cash flow
Regis has reported record operating cash flow of $475 million.
In the fiscal year 2024, the company produced 418,000 ounces of gold at an all-in sustaining cost (AISC) of A$2,286 per ounce.
Gold sales reached A$1.263 billion from the sale of 424,000 ounces, achieving an average price of A$2,976 per ounce, including the impact of hedging.
The company reported an underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of A$421 million, with a margin of 33%, while the actual EBITDA stood at A$297 million.
In December 2023, the company closed out its hedge book at a cost of A$98 million. Despite investing A$296 million into growth initiatives, the company recorded unprecedented cash flows from operating activities, amounting to A$475 million, and ended the year with record cash and bullion holdings of A$295 million.
The fiscal year ended with a net loss after tax of A$186 million, which included significant pre-tax costs related to hedge deliveries (A$81 million), the final hedge book closure (A$98 million), and non-cash impairments of A$194 million, primarily associated with the McPhillamys project. The company’s net debt position as of 30 June 2024 was A$5 million.
Looking ahead, the company has approved the development of the Garden Well Main and Rosemont Stage 3 underground mines. For fiscal year 2025, the company has provided guidance for gold production in the range of 350,000 to 380,000 ounces at an AISC of A$2,440 to A$2,740 per ounce, including A$150 per ounce of non-cash stockpile drawdown.
“The FY24 financial results reflect two major events for Regis. Firstly, the very significant negative impact of the McPhillamys impairment, related to the recent Section 10 Declaration. The results also reflect the end of the hedge book,” Bayer (ETR:BAYGN) said.
“The business is now hedge-free and fully leveraged to the gold price. In the second half of the year, we saw the benefit of this with our operations generating significant cash flow and profit. Over the year our people have continued to remain focused on delivering on our objective of producing safe and profitable ounces in a sustainable manner with our performance reflecting their dedication and commitment to this objective.”