Ramelius’ Share Price Marches Upwards With Gold Price (ASX:RMS)

Ramelius’ Share Price Marches Upwards With Gold Price (ASX:RMS)

The price of gold is on the move upwards again today, gaining 0.25% or US$4.10oz at time of writing, as the market remains depressed by fears of the coronavirus.

Perth based gold producer Ramelius Resources Ltd [ASX:RMS] has seen its share price jump strongly with interest now returning to gold. The miner tacked on a further 5.93% or 7.5 cents today to trade at $1.34.

RMS in blue, gold price in yellow

ASX RMS share price - Marches Upwards With Gold Price

Source: Tradingview

How high could the RMS share price go?

The miner has made considerable gains over the past 12 months. The share price has increased 131% and could push even higher with investors flocking back to gold stocks.

But RMS doesn’t plan to just passively ride this new gold wave. The company has been making waves of its own recently securing one of Western Australia’s highest-grade undeveloped gold assets.

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Last month Ramelius made a bid on fellow Aussie miner Spectrum Metals Ltd [ASX:SPX]. As part of the acquisition, RMS will spend $35 million from its existing working capital and issue SPX shareholders one RMS share per every 10 SPX shares held.

What’s more important is what RMS is purchasing by acquiring SPX — and that is a rather significant amount of gold resource.

Ramelius will acquire SPX’s Penny West project. The project has an expected maiden resource of 799,000 tonnes at 13.8 grams of gold per tonne. Which is the equivalent of 355,500 oz of the precious metal.

Within that is a higher-grade component of 569,000 tonnes at 16.8g/t gold for 306,800oz. Meaning, RMS should be able to keep the cost per tonne of ore mined to a minimum.

Moreover, RMS anticipates there is significant potential to grow the resource further with ongoing geological surveying.

Penny West is about 150km from Ramelius’ Mt Magnet mining operations, which fits with Ramelius’ strategy to acquire high-quality assets within a radius of its production hub.

This is important to note as it enables RMS to mine Penny West with existing infrastructure and offer potential cost savings and operational synergies.

The company has been on a roll with acquisitions having acquired the Marda and Tampia Hill gold projects in 2019.

The gold miner is clearly very focused on building its growth strategy to extend mine life and maximise the value of existing infrastructure in its portfolio, so I wouldn’t count out further bids sometime this year.


Lachlann Tierney,

For The Daily Reckoning Australia

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