RMS was the worst-performing stock in the ASX200 on Wednesday, hence in theory it should bounce the strongest when gold eventually turns – sounds good in principle. The stock endured a sharp ~25% correction in March following a disappointing update for its Mt Magnet operation and a proposed $2.4bn purchase of Spartan Resources (SPR). In April, the company announced 3Q free cash flow of $223mn as the company makes hay while the proverbial sun shines. The RMS-SPR combination will enable the company to increase annual production to ~500,000 ounces by FY30, making it a major player if the precious metal trades higher over the coming years.
- We like RMS back around $2, or 20% lower, for medium-term exposure to gold.
MM is bullish toward RMS medium term
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