Ramelius Resources’ third consecutive annual profit before tax was achieved in the year ended 30 June 2017 at A$25.1 million compared to 30 June 2016 of A$25.3 million. “Although we had a sales increase from A$173.7 million to A$197.4 million, the cost environment consumed any additional margin,” reports . Bob Kennedy, Chairman.
“However, cash flows from operating activities increased from A$65.5 million to A$83.4 million reflecting recovery of sunk costs as we produce from our development assets. Sunk costs refer to those costs that have already been incurred, but which do not impact future decisions about a project. To complete the overall healthy position of the company, our net assets increased from A$127.6 million to A$169.8 million with cash at bank increasing from A$44.3 million to A$78.6 million. If we are to grow by discovery or acquisition, we need to recover our sunk costs, make a profit and add to our cash.
“Industry conditions for the gold sector in the past year were somewhat volatile. However, the gold price operated in an almost A$300 range above A$1,531, peaking at A$1,821 in July 2016, then closing at A$1,616/oz on 30 June 2017. Ramelius achieved an average realised gold price of A$1,628/oz for the year ended 30 June 2017, compared to A$1,596 for the year ended 30th June 2016. The gold price increase during calendar year 2017 has been positive to the financial performance of the company. The gold price this time last year was approximately A$1,648/oz compared to approximately A$1,706/oz at close of business yesterday. I point out however, that apart from the gold price impact, Ramelius has also reaped the rewards of having reduced its operating costs in recent years, with [it] now operating profitably for the past three financial years. I congratulate our Managing Director and all employees for their efforts in this regard.
“The Edna May gold mine was acquired from Evolution Mining Ltd on 3 October 2017 for an upfront cash consideration of A$40 million plus contingent payments of up to A$50 million for gold production above 200,000oz. The total maximum consideration is A$90 million. The acquisition of Edna May strengthens our existing operations at Mt Magnet and Vivien and catapults Ramelius to a +200,000 oz/y gold producer.
Importantly, the acquisition of Edna May plays to Ramelius’s strength in that it is an established West Australian gold mine only three hours’ drive from our Perth office with both open pit and underground components, which we see as our ‘bread and butter’. The Edna May Mine has been quickly brought under the Ramelius operating umbrella and we are pleased with current progress.
“Operationally, Ramelius continued mining at Mt Magnet and at the Vivien and Kathleen Valley sites near Leinster in Western Australia.
“At Mt Magnet, the Perseverance open pit cut back was progressed and successfully completed early in 2017. Mining of the Titan pit cut back continued throughout the financial year reaching higher grade ore near the pit base towards the end of the year. Thirty kilometres to the north of Mt Magnet, Ramelius developed the Blackmans open pit gold mine hauling gold ore to the Checkers processing plant. This satellite pit was completed in the last quarter of 2016/17 followed by a small shallow extension mining operation stretching approximately 100 m to the north of the pit.
“At Kathleen Valley, the company successfully completed the Yellow Aster North and Nil Desperandum small open cut pits in the first quarter of the financial year.
“Mining activities at the Vivien underground high-grade gold mine were progressed which saw the decline advancing 630 m during the year. Stoping commenced early in the financial year and the Vivien mine significantly increased gold ore production from both development and stoping activities.
“Ore from Vivien and Kathleen Valley was trucked to the company’s Checkers processing plant at Mt Magnet which processed a total of 1.9 Mt of gold ore during the year at an average grade of 2.17g/t for nearly 125,000 oz of recovered gold. This was a significant increase from the 1.7 Mt in the previous year at an average 2.2g/t for approximately 110,000oz of fine gold.
“Mt Magnet contributed 66,000 oz of fine gold production for the 2016/17 financial year with a further 46,000oz coming from our high-grade Vivien gold mine. The balance of the 125,488 oz total fine gold production for the year was from the completed Kathleen Valley open pit operation.
“During the year, Ramelius was also busy with new project development activities. The company progressed the Water Tank Hill project located 1.5 km to the west of Mt Magnet and engaged Byrnecut Australia as our underground mining contractor. Work was undertaken to rehabilitate the nearby St George decline to gain access to the Water Tank Hill underground gold deposit. Mining activities have progressed well at Water Tank Hill with first ore trucked to the Checkers processing plant in the June 2016/17 quarter.
“Ramelius also successfully progressed our Milky Way open pit cut back project located 3.6km south of the Checkers plant, where geotechnical and metallurgical test work was completed. This work together with successful nearby drilling at Stellar and Stellar West as well at Shannon located approximately 500 m southwest of Milky Way, were combined to produce a new mining proposal. Approval for this new Cosmos mine area which includes the Milky Way, Stellar, Stellar West and Shannon open pits as well as Brown hill and Vegas pits in the Galaxy area, was received in June 2017. Mining at Cosmos West commenced in the new 2017/18 financial year and is expected to significantly underpin gold production at our Mt Magnet operations for the next two to three years.
“The company conducted other exploration drilling at the Morning Star and Black Cat Deeps projects as well as in the Boogardie Basin and at the Paris pit where encouraging intersections were returned. Successful underground drilling was also carried out at the Vivien gold project which intersected a wider quartz vein some 200 m below the current mine plan.
“The success of the exploration program during the year generated new Ore Reserves for Stellar, Stellar West, Brown Hill, Vegas and Shannon as well as for the Vivien gold mine that for the second year running, saw Ramelius increase, after producing 125,000oz of gold during 2016/17, its Mineral Resource and Ore Reserve gold ounces as announced late in September 2017.
“With a cash and gold balance of approximately A$55 million and no debt as at 31 October 2017, Ramelius continues to have a strong financial balance sheet to enable it to integrate the newly acquired Edna May operations and to take advantage of any other corporate opportunities that may become available to grow.”