Regis Resources Limited (ASX: $RRL) has reported significant cost increases for its McPhillamys Gold Project in New South Wales. The Definitive Feasibility Study (DFS) for the project has revealed higher development costs than previously anticipated and communicated. The project's initial construction capital, pre-production, and life of mine operations have all been impacted by industry-wide inflationary pressures and scope changes, leading to a substantial reassessment of cost estimates.
The general cost inflation seen globally for construction and permitting required scope increases have clearly escalated costs for McPhillamys. The Regis value growth strategy is to continue to build as a profitable and sustainable mid-tier gold company including prudent capital allocation and generating attractive returns for our shareholders. We are taking the necessary time to reduce, as far as we can, the capital required to bring McPhillamys into production through value engineering optimisation. McPhillamys is a key part of Regis' future growth and remains an attractive gold project that, at current gold prices and under our current All in Sustaining Cost assumptions, delivers strong margins with clear upside potential via this rising gold price environment and with mine-life extension opportunities that go well beyond the current plans.
Regis Resources Limited (ASX: $RRL) has provided an update on the McPhillamys Gold Project, indicating substantial cost increases due to industry-wide inflationary pressures and scope changes. The Definitive Feasibility Study (DFS) has revealed higher than anticipated development costs, impacting the initial construction capital, pre-production, and life of mine operations. The company aims to complete the DFS by the end of FY24 and expects to consider the Final Investment Decision (FID) once modification approvals have been received. Regis remains committed to optimizing the project's key capital items and exploring alternative development and operational efficiencies to reduce the capital required for production. The Managing Director emphasized the company's strategy to build a profitable and sustainable mid-tier gold company, focusing on prudent capital allocation and generating attractive returns for shareholders. Despite the cost challenges, McPhillamys is viewed as a key part of Regis' future growth, offering strong margins and potential mine-life extension opportunities in the current rising gold price environment.