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Introduction & Market Context
Ramelius Resources Ltd (ASX:RMS) released its September 2025 quarter (Q1 FY26) results on October 27, 2025, highlighting robust cash generation despite a significant drop in gold production. The company’s shares fell 5.86% to A$3.30 following the announcement, as investors reacted to the production decline despite strong financial performance bolstered by favorable gold prices.
The gold producer maintained its strong cash position, ending the quarter with A$827.7 million in cash and gold, up from A$809.7 million in the previous quarter, while continuing to advance its strategic vision of becoming a +500,000 ounce per annum producer by FY30.
Quarterly Performance Highlights
Ramelius reported gold production of 55,013 ounces for the September quarter at an All-In Sustaining Cost (AISC) of A$1,836 per ounce. This represents a significant decrease from the 73,454 ounces produced in the June quarter and continues a downward trend from the 85,311 ounces produced in the December 2024 quarter.
The quarterly production trend can be clearly observed in the following chart, which shows the contributions from different mining operations:
Despite lower production volumes, the company achieved an operating cash flow of A$159.1 million and underlying free cash flow of A$129 million, supported by a realized gold price of A$4,528 per ounce (up 2% quarter-on-quarter).
Mining and production metrics reveal the reason behind the production decline, with mined grade decreasing to 2.74g/t and milled grade falling to 3.30g/t compared to significantly higher grades in previous quarters:
The Mt Magnet operation, which accounted for all of the company’s production this quarter, saw its AISC increase to A$1,836 per ounce from A$1,310 in the previous quarter. The operation’s mill processed ore from three sources: Cue (41% at 4.42g/t), Mt Magnet (51% at 1.53g/t), and Penny (8% at 9.04g/t).
Strategic Growth Initiatives
Ramelius continues to demonstrate a successful M&A strategy, with the Cue project generating A$419.5 million in free cash flow since its commencement in FY25, fully recouping its acquisition and capital development costs within nine months of production.
The company’s track record of generating positive returns from acquisitions is illustrated in this comprehensive cash flow analysis:
During the quarter, Ramelius completed the acquisition of Spartan Resources at a net cost of A$74.3 million (after accounting for cash acquired) and commenced integration of Spartan employees and systems. This acquisition brings the promising Dalgaranga project into Ramelius’s portfolio, where development is already underway with 920m of lateral development completed at the Never Never underground mine.
The company has significantly increased its exploration budget for FY26 to A$80-100 million, with A$18.8 million already spent in the quarter. Drilling programs delivered impressive results, including intercepts of 43.5m at 11.7g/t Au and 27.6m at 14.4g/t Au at Never Never (Dalgaranga), and 13.5m at 6.22g/t Au at Pepper (Dalgaranga).
Financial Position
Ramelius maintained its strong financial position with cash and gold holdings of A$827.7 million at quarter-end. When combined with an undrawn debt facility of A$175 million, the company has total available liquidity exceeding A$1 billion, providing substantial flexibility for future investments and development.
The company’s key financial metrics show consistent performance despite the production decline:
A detailed breakdown of the quarterly cash flow shows the A$18 million increase in cash and gold holdings, with strong operating cash flow offsetting the Spartan acquisition costs, tax payments, and exploration expenditures:
Ramelius declared a fully-franked final dividend of A$0.05 per share, bringing the total FY25 dividend to A$0.08 per share, representing a 60% increase over FY24 and demonstrating the company’s commitment to shareholder returns despite the production challenges.
Outlook & Guidance
For the remainder of calendar year 2025, Ramelius is focusing on several key initiatives, including:
1. Completing the Rebecca-Roe Definitive Feasibility Study, with a final investment decision expected on October 28, 2025
2. Continuing the ramp-up of exploration activities, building on the A$18.8 million spent in Q1
3. Finalizing Spartan integration studies and releasing a five-year outlook on October 28, 2025
4. Announcing initial reserves for the Never Never and Pepper deposits
The company’s vision to become a +500,000 ounce per annum producer by FY30 represents a significant increase from its current annualized production rate of approximately 220,000 ounces, suggesting substantial growth will be required through both organic development and potential further acquisitions.
While Ramelius faces challenges with declining production in the near term, its strong cash generation, robust balance sheet, and strategic growth initiatives position the company to pursue its long-term production targets. Investors will be closely watching the upcoming announcements on October 28, which should provide greater clarity on the company’s path to achieving its ambitious growth objectives.
Full presentation:
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