Gold is a hot topic at present, following a meteoric rise and a sharp pullback. Not only has the well-documented weakening of the US dollar continued — a trend noted in this commentator’s earlier review of Northern Star Resources — but several cryptocurrencies have also been trending lower over the past six months. The landscape of global financial reserves is clearly shifting, though uncertainty remains high.
Ramelius Resources (ASX: RMS) may offer a way to ride this wave without undue risk. The company could prove an exceptional investment if the current momentum toward gold as a reserve asset persists, while still remaining a reasonable proposition if it does not.
Ramelius maintains very low debt levels and a substantial pipeline of projects. Its acquisition of Spartan Resources was completed in August 2025 at a consideration of $0.25 in cash plus 0.6957 Ramelius shares per Spartan share. This equated to total cash payments to Spartan shareholders of A$270.6 million (Spartan had roughly A$272.1 million in cash and equivalents on its books prior to the acquisition). With RMS reporting cash assets of A$783.7 million at the end of FY2025, the company still appears to have a significant war chest to support further growth through acquisition.
The company is also undertaking a A$250 million share buyback program, helping to offset concerns about share dilution from new equity issuance — an issue highlighted by Simply Wall St in its coverage of the stock.
Financially, the company appears healthy. CommSec reports operating margins around the 50% range, with return on capital employed around 30%. The current price-earnings ratio is approximately 17 times last year’s earnings. What the forward PE might be, given the recent rise in the gold price, is difficult to determine, making intrinsic value estimates particularly challenging in the present environment. Even so, Ramelius appears reasonably priced for a company of its quality, even if the gold price were to retreat materially.
Some analysts expect RMS’s earnings to soften slightly over the next year before new operations come online. However, the company has reaffirmed guidance of 185,000 to 205,000 ounces for FY2026. While this would place revenue below the exceptional FY2025 result, it would still extend the longer-term upward revenue trend.
In its December quarterly update, Ramelius reported a “clear pathway to become a 500,000-ounce-per-year gold producer by FY30.” If achieved, this would likely place the company among the top 20–30 gold producers globally.
There is, of course, no certainty. The gold price remains closely linked to geopolitical developments, and investors should expect volatility. Intraday price movements and trading volumes can be significant, and daily share price swings of 5% can occur without an obvious catalyst.
It is also characteristic of mining operations that costs are higher at both the start and end of a mine’s life. As such, the strong margins currently enjoyed by RMS should not be taken for granted. Historically, the company has paid out only around 19% of earnings as dividends, with management preferring to reinvest profits rather than return them to shareholders. This may make RMS less attractive to income-focused investors or those seeking long-term stability.
Overall, the investment case for Ramelius Resources appears compelling for investors with a tolerance for volatility.
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Disclaimer
The user Robbo has a position in ASX:RMS. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
