Ramelius Resources Limited

Higher Cost of Production leads to Margins Contraction: Ramelius Resources Limited (ASX: RMS) recently updated that Van Eck Associates Corporation has become an initial substantial holder of the company with the voting power of 6.54% on & from 15 March 2019.
 
Also, the company has lately declared its 1H19 results. As per the same, the revenues for the half-year rose by 26% to come in at $181.8 Mn vis-a-vis $144.8 million reported for the pcp. This hike in sales revenue was witnessed on the back of purchase of Edna May with a full 6 months of the contribution being included in the half-year as compared to only 3 months for the pcp. However, an Improved production at Edna May and a higher average gold price for the half-year were offset by lesser production at Mt Magnet. This output from Mt Magnet was down on account of the lower grade ore extracted at various sites as the activities were focussed on mine development. The net cash from operations for the 1H FY19 was $63.5 million vis-a-vis to $59.6 million in the pcp. This rise was witnessed on the back of higher cash margins during the period. The upgraded cash margins were the result of a higher gold price and increased production.
 
What to Expect from RMS: As regards the outlook, the company has a robust financial position, which meansthat Ramelius is well placed to progress development at the recently acquired Marda and Tampia Hill projects. The production from Marda is scheduled to commence from the year 2020. Moreover, the ore grades are expected to increase at Mt Magnet over residual FY 2019 as the projects developed during the current half-year reach the steady state of production.
 
 

RMS’s Financial Highlights (Source: Company Reports)
 
On the valuation front, the Stock is trading at a price to book multiple of 2.4x While the peer median stood at 1.5x, signifying overvalued at the current juncture.

In the meantime, the stock price has risen 108.54% in the past three months and is trading close to its 52-week high price of A$0.870. Thus, we can assume that the company’s stock price has discounted all the positive factors in the present market price. Therefore, we give a “Sell” recommendation on the stock at the current market price of $0.855 per share (down 1.156% on 23 March 2019).
 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.