Australia’s third-biggest goldminer by market capitalisation, Regis Resources, has warned it may face an impairment of up to $280 million, as its difficult year continues.
Having watched its share price fall by almost 60 per cent over the past 10 months, Regis confirmed it was time to cut some book values too, particularly on the Garden Well, Rosemont and McPhillamys assets.
The Garden Well and Rosemont impairments relate to material movement and other pre-production activities, while the McPhillamys write-down is a mea culpa over the $157 million price tag put on the deposit when it was acquired for scrip in October 2012.
The purchase was made before the gold price slump of 2013, and Regis said it was no longer planning to conduct a feasibility study on the McPhillamys deposit.
Regis was Australia’s second-biggest goldminer by market capitalisation one year ago, but has recently been overtaken by the highly acquisitive Northern Star and the dual listed OceanaGold.
Most of OceanaGold’s shares are held on the Toronto exchange rather than the Australian bourse, while Northern Star’s rise has been on the back of buying five new mines from major miners since December.
Northern Star, which has enjoyed a 285 per cent rise in its share price since December, continued its winning streak on Wednesday by announcing an upgrade to the size of the gold resource at its biggest mine, Jundee.
Drilling conducted by Jundee's former owner, Newmont, delivered a 68 per cent rise in the resource, which now stands at 851,000 ounces.
Baillieu Holst analyst Rob Craigie said extending the mine life at Jundee was critical for Northern Star.
‘‘This resource upgrade is a good first step towards increasing mine life and potentially the valuation,’’ he said.
