RMS reported 1H results broadly in line with expectations but surprised with a higher-than-expected 3cps dividend, supported by a strong $658m cash balance. Near-term free cash flow will be pressured as the company invests to lift production above 500kozpa by 2030, though liquidity remains strong with an undrawn $500m credit facility.
The Dalgaranga development remains a key catalyst, with high-grade Never Never ore now trucking to Mt Magnet and first stoping expected in March/April, which should lift grades and production. Exploration success at Penny and Cue, along with stronger performance from Never Never, puts RMS in a position where a production guidance “beat” wouldn’t surprise us.
- We like the risk/reward towards RMS ~$4 while gold trades in the $USS5,000 area.
MM is bullish towards RMS ~$4
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