Gold producer Ramelius Resources has achieved guidance for the March quarter with claims of “near record” production.
With guidance of 21,000-23,000 ounces, Mt Magnet mine has come through with 22,655 ounces produced in the third quarter FY15, with the All-In Sustaining Cost expected to be below guidance of $1100 per ounce.
Gold is currently trading around US$1171 after a 1.9 per cent rally overnight, and although analysts expect further price falls this year, this is expected to lead to a trough and market turnaround as investors retreat from the iron ore market to safer commodities.
Ramelius CEO Mark Zeptner said the turnaround at Mt Magnet was in full swing, with guidance achieved for four consecutive quarters.
“Combined with a stronger Australian dollar gold price, this has resulted in a substantial boost to cash and gold on hand, which currently represents approximately 7.6 cents per share,” he said.
“The cash generating ability of our Mt Magnet operation, backed by an ore reserve of more than 300,000 ounces, is the result of a sustained effort by our operations team and is underpinning our strategy of building a profitable gold business.
“With two new high grade mines coming on stream shortly, Ramelius is well placed to take advantage of the current Australian dollar gold price.”
Ramelius (ASX:RMS) has been on the rise since April 1, climbing from 0.10 cents up to 0.145 on Wednesday morning, up 45 per cent in only a week and the best share price Ramelius has seen since mid-2013.
The company has also completed final stages of due diligence on funding for the Vivien Gold Project, ready for June 2015 quarter commencement of the underground mine portal.
Environmental permissions are also close to completion for the Kathleen Valley Gold Project, with open pit mining expected to commence in the June quarter.
Zeptner said he expected the bottom of the gold market to lie around US$1150 to US$1200 per ounce.
“We tend to think there’s a lot of money that’s gone into US equities in the stock market; it’s really the money and sentiment in terms of investor sentiment that really drives the prices, so if any money comes out of there, one place that it can go is into gold,” he said.
“There’s also a lot of data in the market to suggest that the Aussie dollar is going lower, and the RBA wants it to go lower, so if you put those two things together we’re looking at about $1500 an ounce plus.
“The fact that we’re at 77c exchange rate make a huge difference, compared to when it was at parity last year, so that’s been one of the big drivers with us for better performance, but also a much better Aussie dollar gold price, because all the gold we sell is all Aussie dollar based, there’s no US trade.”
Zeptner said while the company is guarded about revealing it’s All-In Sustaining Cost he was confident that it was below guidance, and that the figure will be confirmed later in the month.