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Ramelius Resources abandons Karora takeover plans as gold output surges

Ramelius Resources has shelved its takeover ambitions for ASX listed Canadian miner, Karora Resources and revealed a surge in gold output for the March 31 quarter.

And with Australian gold prices above $A3,000 for most of the quarter (and US dollar prices above $US2,000 an ounce as well, the company’s revenue looks like hitting record highs.

Ramelius’ update did not mention prices.

Ramelius revealed it had abandoned its ambitions for Karora just before the Easter break, telling investors that “Following its usual disciplined due diligence process, Ramelius advises that no final agreement, including on value, was reached.”

That deal would have cost Ramelius more than $A1 billion – either cash or shares but probably a mix in both – and in updates earlier this year had made a big play of how much cash it had on hand, how much it would have by the end of June and how well production was travelling.

And on Wednesday said confirmed the rise in first quarter gold production, saying that it had dropped its 2021 decision to stop issuing early quarterly updates because the March quarter improvement (and fall in costs) was so large: in fact the company said the output was an all time high.

Quarterly gold production of 86,928 ounces (oz) was significant higher than guidance of 70,000 to 77,000 ounces and topped the previous record of 86,516 ounces.

Ramelius said that cash and gold on hand at March 31 totalled just over $A407 million, up $A125 million from the end of December’s $A282 million, while free cash flow for the quarter was a record $A125.3 million (almost double the $A69.4 million in the June, 2020 quarter.

Because of the sharp jump in gold output, the company says its All in Sustaining Cost per ounce (AISC) will be “materially lower” (in the range of $A1,375 – $A1,475/oz.

Ramelius said it was sticking with second (June 30) half production guidance 140,000 – 155,000 ounces at an AISC of $A1,700- $A1,800/oz.

Group Quarterly gold production saw the Mount Magnet (incl. Penny) – produce 45,927 ounces and Edna May (incl. Tampia, Marda & Symes), 41,001oz

In Wednesday’s report, Ramelius noted that “In April 2021 it was noted that Ramelius’ previous practice of releasing a Production Update as a pre-Quarterly Report would cease going forward. Any material differences to Guidance (above or below) will be managed in accordance with the Company’s continuous disclosure obligations.

“Today’s report is considered to meet this criteria, given that production is materially above Guidance and Company expectations.

“Further details will be provided in the Quarterly Report later in the month, including a review of how this outperformance will positively impact full year FY24 gold production and AISC Guidance.