Regis Resources (RRL) reported an in-line Dec Q production of 91koz at an AISC of $1,219/oz (+3% on production, -1% on costs QoQ and vs Argonaut 88koz). The result was in-line despite an unplanned three-day mill outage. FY20 Guidance is unchanged at 340-370koz however FY20 cost guidance has crept up incrementally to $1,125-1,195/oz. Cashflow from operations was $100m (+20% vs Sept Q) on a 5% higher received gold price. RRL finished the Q with cash of $168.8m (+$21.4m QoQ). Rosemont continues to make good progress with first stopes expected to commence in the March Q. Exploration drilling here is showing mineralisation projects up to 600m below existing Rosemont underground development. RRL continues to have success on underground targets including Baneygo (6m @ 6.7g/t Au), Gloster (1m @ 57.7g/t Au) and Garden Well (8m @ 4.7g/t Au) which we believe could convert to a series of discrete high-grade underground operations in the medium term diversifying mill feed and extending the Duketon mine life. We maintain our BUY recommendation and target price of $5.63ps. Using Spot gold prices over life of mine generates a valuation of $6.90ps.
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