Morningstar | Regis Remains a Well-Run but Overvalued Gold Miner. Near-Term Gold Price Rise Boosts FVE Modestly.
The rapid development of three gold mines in Western Australia transformed Regis Resources from small explorer to midsize gold producer. Management has a strong track record in buying, developing, and running gold mines, but the industry is cyclical and capital-intensive, which makes consistent excess returns challenging. Reserve life is reasonably short at less than 10 years, and replacement of finite life is a challenge. Regis is a relatively low-cost producer, but its lack of reserve life precludes a moat. Management has a bias towards a strong balance sheet and dividend payments, which we think is appropriate. However, the gold price and the challenges of mining, particularly exploration and the development of new mines, will decide Regis' long-term performance. Significant management ownership aligns their interests with those of other shareholders.Regis Resources is a gold producer. Co. and its controlled entities are engaged in the production of gold from the Duketon Gold Project; exploration, evaluation and development of gold projects in the Eastern Goldfields of Western Australia; and exploration and evaluation of the McPhillamys Gold Project in New South Wales. Co. has two reportable segments which comprise the Duketon Gold Project; being Duketon North Operations, comprising the Moolart Well Gold Mine, and Duketon South Operations, incorporating the Garden Well Gold Mine and the Rosemont Gold Mine.
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