Regis takes US$130M hit on Australian project in new heritage zone

Regis Resources’ (ASX: RRL), the third-largest gold miner on the ASX, says its McPhillamys project in Australia has lost almost all of its value after the federal government issued an unexpected environmental protection declaration. 

Environment Minister Tanya Plibersek’s Section 10 ruling, intended to preserve Indigenous heritage grounds, means that Regis cannot build the mine’s tailings dam at the planned location in New South Wales.

The miner revealed on Wednesday the financial hit of Plibersek’s decision, booking a non-cash impairment of A$192 million (US$130 million) against a significant portion of the carrying value of the proposed mine.

Regis Resources also withdrew McPhillamys’ definite feasibility study, scrapping the 1.89 million oz. ore reserve previously reported for the asset. This official estimate is central to how investors value mining companies.

Shares in Regis Resources closed 2.7% higher on Wednesday in Sydney at A$1.74 apiece, valuing the company at A$1.3 billion. They’ve traded in a 52-week range of A$1.44 to A$2.33. 

Decade delay

The company noted that choosing a new site would effectively restart the approvals process. This could potentially delay the project by up to a decade, making it unviable in its current form.

“To advance any form of realistic and approvable alternative tailings solution requires further extensive investigations and studies along with the restart of the state and federal approvals processes,” the company said. “This could take between five and 10 years, with no certainty of a viable alternative being realized.”

Regis said the Indigenous group that may have the clearest legal authority to assess the heritage value of the site, the Orange Local Aboriginal Land Council, hasn’t opposed the project.

In a submission to planning authorities last year, the group said the mine wouldn’t put any important heritage sites or artifacts at risk, adding that any potential impacts could be “appropriately managed and mitigated.”

The Western Australia-based company said more details on the situation will be unveiled in its full-year 2024 financial results, to be published on Thursday.