Inflation, De-Dollarisation, ESG And Automation Will Support Gold Demand

Key Takeaways

• Consistent production outperformance, operational efficiency gains, and disciplined risk management position Ramelius for strong revenue growth, margin expansion, and outsized market share gains.
  
• Advanced mine planning, early adoption of cost-saving technologies, and a robust balance sheet enable rapid project development and resilience against sector constraints.
  
• Reliance on exploration success, shifting investor preferences, and operational uncertainty pose long-term risks to revenue, margins, and overall growth for Ramelius Resources.

Catalysts

Engages in the exploration, evaluation, mine development and operation, production, and sale of gold.

• Analyst consensus expects production increases from resource model reconciliation at Cue, but given the substantial 31% production uplift and repeated outperformance in upper weathered zones, there is a real possibility of further unanticipated "resource surprises" across other high-grade pits, driving materially higher revenues and cash flows year over year.
  
• While analysts broadly see cost and earnings synergy from the Spartan merger, the integration of Spartan's aggressive exploration culture and advanced mine planning could unlock even greater operational efficiency, potentially accelerating throughput expansions and lowering all-in sustaining costs to levels rarely seen in the sector, substantially boosting net margins and long-term earnings.
  
• Ramelius is uniquely positioned to benefit from persistently elevated global gold prices, as a wave of de-dollarisation and central bank gold buying intensifies, fueling exceptional sales revenue growth that could outperform peers less leveraged to spot pricing due to Ramelius's disciplined, opportunistic approach to hedging and large unhedged production base.
  
• The company's peer-leading balance sheet-with cash and gold holdings exceeding $800 million even after major acquisitions-sets up Ramelius for rapid, internally funded project development and opportunistic M&A in a capital-constrained sector, allowing for market share expansion and accelerated earnings growth while competitors remain hampered.
  
• Their early and accelerating adoption of low-cost power sources (gas pipelines and renewables), mine automation, and advanced ore control not only supports persistent margin expansion but also creates the potential for Ramelius to command ESG premiums and privileged capital access, structurally enhancing long-term profitability.

Ramelius Resources Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Ramelius Resources compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Ramelius Resources's revenue will grow by 17.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 33.2% today to 25.6% in 3 years time.
• The bullish analysts expect earnings to reach A$431.7 million (and earnings per share of A$0.23) by about August 2028, up from A$345.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 21.9x on those 2028 earnings, up from 15.6x today. This future PE is greater than the current PE for the AU Metals and Mining industry at 14.5x.
• Analysts expect the number of shares outstanding to grow by 0.87% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.92%, as per the Simply Wall St company report.

Ramelius Resources Future Earnings Per Share Growth

Risks

• The ongoing global shift toward green energy and increased capital allocation to ESG-compliant sectors could lessen long-term investor demand for gold, potentially placing downward pressure on gold prices and directly affecting Ramelius Resources' top-line revenue.
  
• The company's significant ramp-up in exploration spending and planned expansions at various sites will likely increase both operating and capital costs at a time when ore grades are reliant on newly discovered high-grade zones; if these exploration efforts do not yield sustainable high-grade resources, net margins and future earnings could be squeezed.
  
• Ramelius is not providing FY '26 production and cost guidance until after integrating Spartan Resources and finalizing the Dalgaranga processing options, which introduces heightened uncertainty around near
• and medium-term production volumes, costs, and capital requirements, potentially impacting investor confidence and earnings visibility.
  
• Finite reserves and the closure of previous operations, such as Edna May moving to care and maintenance, highlight Ramelius's ongoing need to replace depleting resources; failure to discover or acquire new economic gold deposits could lead to declining production volumes and therefore lower long-term revenue.
  
• Advances in gold recycling technologies and a potential shift in investor preference toward alternative assets, including cryptocurrencies, may structurally erode physical gold demand, ultimately placing long-term pressure on both industry-wide and company-specific revenues for Ramelius Resources.

Valuation

• The assumed bullish price target for Ramelius Resources is A$3.95, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Ramelius Resources's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$3.95, and the most bearish reporting a price target of just A$2.6.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be A$1.7 billion, earnings will come to A$431.7 million, and it would be trading on a PE ratio of 21.9x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of A$2.82, the bullish analyst price target of A$3.95 is 28.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.