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DIGGERS & DEALERS PREVIEW REFINING THE GOLD STANDARD abcrefinery.com

Regis joins

club Tropicana

by Dominic Piper

egis Resources Ltd surprised many gold industry observers “There are plenty of opportunities around but Tropicana is
Rin April when it emerged as the successful bidder for IGO different to many of them,” Beyer explained. “It is not a turnaround
Ltd’s 30% share in the Tropicana JV with AngloGold Ashanti Ltd job or a bargain buy. We paid the valuation for it because it is a de-
in Western Australia. risked asset, not a cheap purchase that two years later we are still
Regis agreed to pay $903 million (although the closing figure trying to fix. There is no need to change the culture, it has been
was $889 million) for its share in Tropicana, which has historically managed well, that is why we are not picking it up for a bargain.”
produced 450-500,000 ozpa gold. The company fought off stiff The project has had an immediate impact on Regis’ resources,
competition for the prize and the analyst community was mixed in reserves, production and cash flow. An updated resource/reserve
its response to the deal with concerns over Tropicana’s mine life statement in June showed an increase in total resources from 5.4
and the amount paid. moz to 10.4 moz and reserves from 2 moz to 4.8 moz. Production
Regis managing director Jim Beyer is in no doubt the acquisition is expected to contribute an additional 106,000-114,000oz over
is a transformative one for his company. the next 12 months with free cash flow also expected to be strong
given AISC of $1,230/oz-$1,300/oz for FY2021.
“If we didn’t think it was a good deal, we wouldn’t have made the
offer we did,” Beyer told GMJ. Performance at the mine has slipped from its historical highs of
500,000 ozpa but with cutbacks due for completion this financial
For Regis, Tropicana’s value is obvious. It is a strong-performing
year, Beyer is confident Tropicana will return to long-term average
asset, capable of providing consistent free cash flow over a long
output for the next decade.
period.
“It is in a recapitalisation phase but will come out of that in the next
The circumstances around the trade were unique. IGO has
six months as the cutback at the Havana pit is completed and the
been involved in Tropicana since its discovery in 2004. However,
underground at Boston Shaker is ramped up,” Beyer said.
having recently hitched its wagon to the clean energy metals train
through the purchase of 49% of the Greenbushes lithium mine “Once we come out the other end production will firm up and unit
and hydroxide facility, IGO needed to balance the books and its costs will come down. From there, we see value in potential mine
gold asset was an obvious candidate. life extensions. AngloGold has already said it expects to return
The Duketon portfolio has rebounded in recent months with
gold production returning close to long-term averages of
350-380,000 ozpa

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