Shares in WA goldminers Regis and Westgold Resources have taken a hit following market updates outlining cost and operational issues.
Shares in both Western Regis and Westgold Resources have taken a hit following market updates outlining cost and operational issues.
Inflationary cost pressures have taken a toll at Regis Resources, with total cost estimates for its McPhillamys gold project rising significantly.
Jim Beyer-led Regis told the market most detailed cost estimate data on the NSW project had occurred in September 2017 inside the company's preliminary feasibility study, and this data was now out of date.
Within the document, resource market analysts also predicted total costs for the project would reach between $550 million and $650 million.
Presently, it is predicted total construction costs will range between $845 million and $900 million, along with pre-production costs in the vicinity of $115 million to $155 million. That takes the total project cost to between $960 million and $1.1 billion.
Subiaco-based Regis is hopeful its pre-production cost estimate could be reduced below the current guidance, upon completion of its definitive feasibility study, as it is still weighing up alternatives surrounding early mill feed options and initial ramp-up phase associated expenditure.
Mr Beyer, the company's managing director, said the miner wouldn't be deviating from its desire to provide shareholder value wherever possible.
"The Regis value growth strategy is to continue to build as a profitable and sustainable mid-tier gold company including prudent capital allocation and generating attractive returns for our shareholders," he said.
"We are taking the necessary time to reduce, as far as we can, the capital required to bring McPhillamys into production through value engineering optimisation.
"McPhillamys is a key part of Regis’s future growth and remains an attractive gold project that, at current gold prices and under our current all-in sustaining cost assumptions, delivers strong margins with clear upside potential via this rising gold price environment and with mine-life extension opportunities that go well beyond the current plans.”
The company's DFS is expected to be completed by the end of the 2024 financial year, and a final investment decision would be able to occur following all modification approvals had been received, following a seven to 10-month process.
Regis shares were down 2 per cent as of 12.06pm AWST, trading at $3.81.
In contrast, Westgold Resources shares fell 13 per cent on Wednesday morning, following the gold producer's preliminary March 2024 quarterly update.
As of 12.11pm AWST, Westgold was trading at $2.37 per share, down 14 per cent.
Westgold said it produced 52,100 ounces, which was down from 59,238oz during the December 2023 quarter due to variables including inclement weather and operational pauses.
"We remain focused on recovering lost ounces in the 2024 financial year but remain unremorseful in pausing mines that cannot deliver the returns our shareholders expect," Westgold managing director and chief executive officer Wayne Bramwell said.
"The operational and weather issues encountered during the third increase pressure to prematurely commence mining at the Great Fingall mine in the fourth quarter of the 2024 financial year. But rushing the mining execution without the requisite data escalates operational risk and cost.
"This is not our preferred operating model and as such, Westgold will systematically complete its evaluation on the early mining of shallow flat structures at Great Fingall with a view to commence mining in the first quarter of the 2025 financial year."
