Gold prices steady ahead of Fed decision; weekly weakness noted
On Thursday, Canaccord Genuity adjusted its stance on Regis Resources Ltd . (ASX:RRL:AU) (OTC: RGRNF), downgrading the mining company's stock rating from Buy to Hold. The decision comes despite maintaining a price target of AUD3.10 per share. The move was prompted by a valuation analysis following the incorporation of the December quarter 2024 results and a forward roll of their financial model. According to InvestingPro data, the stock is currently trading at $1.84, near its 52-week high of $1.90, with technical indicators suggesting overbought conditions.
Tim McCormack of Canaccord Genuity provided insights into the rationale behind the rating change. He noted that the price target remains steady at AUD3.10 per share, which could increase to AUD3.25 at spot prices. The price target is based on a net present value (NPV) discounted at 5%. Supporting this valuation perspective, InvestingPro data shows the company maintains a healthy free cash flow yield of 8% and an EV/EBITDA ratio of 6.07x. Despite the downgrade, McCormack acknowledged Regis Resources (OTC:RGRNF)' strong forecasted free cash flow (FCF) yields, which are expected to be 14% in the fiscal years 2025 and 2026 estimates, and could rise to 17% at spot prices.
The valuation metric used by Canaccord Genuity, the price to net asset value (P/NAV), stands at 1.04 times, which has influenced the firm's decision to move to a Hold recommendation. This metric is a common way to assess the value of companies in the mining sector, comparing the market price of the stock to the net asset value per share. For deeper insights into Regis Resources' valuation metrics and 12 additional exclusive ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
Regis Resources is a gold production and exploration company based in Australia. The company's operations include the Duketon Gold Project and the McPhillamys Gold Project in New South Wales. The shift in rating by Canaccord Genuity reflects a cautious approach based on the company's current valuation rather than its operational performance or cash flow potential.
Investors and market watchers typically look to such ratings and price target updates as indicators of a firm's future performance, although they are not guarantees of market behavior. The unchanged price target suggests that Canaccord Genuity sees no immediate catalyst for a significant change in the company's stock value, while the downgrade to Hold implies a belief that the stock may not outperform the market in the near term.
In other recent news, Regis Resources reported mixed outcomes for its first-quarter performance for the fiscal year 2025. Despite robust production at the Duketon and Tropicana sites, the company encountered a setback with its McPhillamys project due to a heritage protection declaration, resulting in a significant impairment and a reduction in gold reserves. However, the company reported an increase in cash and bullion, with a strong financial outlook and a focus on cash generation and strategic capital management.
Regis Resources produced 94,500 ounces of gold at an all-in sustaining cost of $2,495 per ounce, taking advantage of a record average gold price of $3,717 per ounce. The company's cash and bullion holdings increased to $380 million, maintaining a net cash positive position against $300 million in debt. The company is exploring next steps for the McPhillamys project while focusing on growth at the Duketon and Tropicana sites.
Regis Resources aims to maintain Duketon production between 200,000 to 250,000 ounces until FY2028 and expects the Havana Underground project at Tropicana to yield 55,000 ounces starting in two years. The company is considering dividends, share buybacks, and debt repayment as part of its capital management strategies. These are the recent developments regarding Regis Resources.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.