Ramelius Forges Its Future: Dalgaranga Acquisition and the Path to 500k Ounces
A record margin year funds a transformational pivot from single-hub gold miner to long-life, multi-asset growth story.
RMS.AX · Earnings Call · 2026-08-20
A Year of Strategic Repositioning
Ramelius Resources enters FY27 a different company than it was a year ago. The acquisition of Spartan brought the world-class Dalgaranga gold mines into the fold, while the pending sale of the non-core Edna May hub for $300 million sharpens the portfolio around high-grade, high-margin production. Management’s confidence is anchored by a maiden underground ore reserve at Never Never of 1.6 million ounces at 7.3 grams per tonne and a PFS showing an NPV of $3.5 billion at AUD 4,500 gold (or $6.4 billion at AUD 6,000). As Mark Zeptner put it at the start of the call, the year was about "consolidating our asset base to achieve production of plus 500,000 ounces per annum by FY '30." “We made a commitment to shareholders in December to maintain our returns through this period of investment into the business.” — Mark Zeptner, Managing Director and Chief Executive Officer · 2026-08-20 That commitment is being kept: a $250 million buyback and a dividend increase.
We also entered into an agreement for the sale of our noncore Edna May hub for $300 million, which we expect to complete in September.
The financial print shows the discipline. Underlying EBITDA hit $765 million from 192,000 ounces sold at a record 74% margin — better than $4,000 per ounce. “The business generated an underlying EBITDA of $765 million from the sale of 192,000 ounces at a record 74% margin, which is exceptionally strong in this year of consolidation and transformation.” — Ben Ringrose, General Manager of Finance · 2026-08-20 Enhanced by the first full semester of no hedging, the company closed out its remaining FY27 gold forwards at a cost of $28.4 million, and free cash flow conversion remained strong, with $393 million of underlying free cash flow after growth capital and exploration.
Cost Inflation Meets a Global Fuel Squeeze
Yet the year also brought pressure. Management guided to FY27 costs running ~8% higher, citing wage inflation, higher royalty charges, and — crucially — high fuel costs exacerbated by the Iran conflict. Diesel assumptions moved from $1.00 to $1.25 per litre, and the same inflation is hitting capital estimates: the Mt Magnet mill expansion EPC is seeing "10% to 15%" cost escalation, per Mark Zeptner. “At least sort of 10% to 15% is sort of where the numbers are landing.” — Mark Zeptner, Managing Director and Chief Executive Officer · 2026-08-20 This is a familiar refrain across the sector, but it matters for a company in an investment-heavy phase, where every dollar of cost overrun reduces the headroom for the dividend and buyback. The same discipline that made Mt Magnet a low-cost hub is now being tested: “I think you need to, I suppose, bear in mind that Mt Magnet is even compared to WA gold plants, a very low-cost plant...” — Mark William Zeptner, CEO and Managing Director · 2025-07-29 — that was the case just a year ago.
The company’s own keyword history now reads like a pivot: reserve, capital investment, and ounces per annum dominate the conversation, replacing the earlier focus on individual pits like Penny West. The shift is visible in the numbers: Galaxy’s mine life has been extended to 2032, with an increase in planned production rate to 800,000 tonnes per annum — a decision that adds roughly $30 million to FY27 AISC but secures years of high-margin output.
Shareholder Returns Underwrite the Growth Story
The company returned $256 million to shareholders in FY26, representing 65% of underlying free cash flow, and declared an eighth consecutive final dividend. The dividend philosophy, as CFO Darren Millman noted, is "maintain and grow," with a minimum sustainable floor of $0.02 per share. “We had a look at our dividend. Obviously, the gold price has run very strongly...” — Mark Zeptner, CEO and Managing Director · 2026-02-19 That quote from the February call captures the evergreen tension: whether to push extra cash into buybacks or dividends as the gold price climbs. For now, the balance sheet remains robust — $650 million cash plus an undrawn facility for $1.1 billion liquidity — and the development pipeline is fully funded.
Looking ahead, the next catalyst is the full-year production outlook and FY27 guidance due in September, which will incorporate the final EPC costs for the mill and fresh life-of-mine plans. As Mark Zeptner reminded, the company has met guidance for six straight years, a track record that lends credibility to the promise of 170% production growth by FY30. With the stock trading at a price-to-book near historic levels, the market will be watching whether Ramelius can execute on its transformation without losing the capital discipline that built its reputation.