S&P/ASX 200 Index (ASX: XJO) gold stock Ramelius Resources Ltd (ASX: RMS) is getting walloped today.
Ramelius shares closed yesterday trading for $2.79. In trade on Tuesday, shares are changing hands for $2.38 apiece, down 14.7%.
For some context, the ASX 200 is down 1.3% at this same time. And in a better comparison with its peers, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 4.4%.
Here's what's happening.
ASX 200 gold stock under pressure
The Ramelius share price is under heavy selling pressure today after the company released its long-term mining and growth plans.
The ASX 200 gold stock has a strong balance sheet, with cash and gold of $501.7 million as at 31 December. Ramelius also said it expects to generate more than $270 million in underlying free cash flow in H2 FY 2025. That's assuming an AU$4,000 per ounce gold price.
But investors could be favouring their sell buttons amid the $95 million in upgrade costs at its Mt Magnet mill, located in Western Australia. The upgrades are forecast to increase throughput at the mill to 3 million tonnes per annum (Mtpa) capacity. Management forecasts that the upgraded equipment will reduce mill operating unit costs from AU$28.17 per tonne in FY 2024 to AU$21.42 per tonne by FY 2028.
Ramelius also highlighted its 17-year expansion plans for the Mt Magnet gold mine.
The ASX 200 gold stock's new plan envisions producing 2.1 million ounces of gold, with ongoing exploration focused on extending high-grade sources. This could see historical production from the mine exceed 8 million ounces of gold.
What did management say?
Commenting on the latest developments, Ramelius managing director Mark Zeptner said, "The Mt Magnet hub continues to perform at its highest level of production and cashflow generation in FY25 with cost forecasts at an industry leading AISC of A$1,600 per ounce for the next 2.5 years."
Zeptner added:
The planned Mt Magnet mill upgrade to 3Mtpa (from 2Mtpa) capacity will cost A$95M with both the benefit of increasing capacity and reducing our milling costs by over 15% over the Mine Plan on all ore sources. An investment decision is planned for the September 2025 Quarter with construction planned for the December 2026 quarter.
Addressing the miner's reserve estimates, Zeptner said:
The announced maiden Ore Reserve and updated Mineral Resource (open pit and underground) now demonstrates our vision for Eridanus to become the third +1Moz mine in the Mt Magnet field alongside Hill 50 & Morning Star.
Despite today's sharp fall, shares in the ASX 200 gold stock remain up 58% over 12 months.
