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4th October 2018

Ramelius Resources Ltd (RMS) – Initiation Speculative Buy – PT $0.60

Ryan Armstrong

(02 9377 1500)

[email protected]

Capital Summary Ordinary Shares 528.5m

Unlisted Options 3.0m

Unlisted Performance Rights 9.2m

Market Capitalisation (m, undil.) $251.1

Net cash/gold (m) – 30/6 $95.5

Share Price (3/10/2018) $0.475

52 week high/low $0.635/$0.33

Share Price Graph

Directors Mark Zeptner Managing Director

Kevin Lines Non-Exec Chairman

Michael Bohm Non-Exec Director

David Southam Non-Exec Director

Dom Francese Company Secretary

Major Shareholders Ruffer LLP 10.0%

Van Eck 7.4%

Dimensional Fund 4.8%

Credit Suisse Group 2.5%

USAA Investment Management Co. 2.4%

Investment Highlights Ramelius Resources’ current assets include:

- Mt Magnet: Flagship asset and location of

processing facility (operates at ~2Mtpa)

- Vivien Mine: Underground operation that

provides high grade feed to Mt Magnet

(haulage of ~300km)

- Edna May: Purchased from Evolution

Mining was finalised in October 2017 for

$90m ($40m up-front with $50m of

contingent payments). Is expected to

contribute 80-85koz of production in

FY2019

FY2018 Production (actual) = 208,118oz @ AISC

A$1,191/oz. FY2019 Guidance = 200-220koz @

AISC A$1,150-1,250/oz

Mineral Resources stand at ~3.5Moz and

Mineral Reserves ~700koz (all numbers exclude

recently announced Marda acquisition)

Production from Mt Magnet (including

underground ore that is being delivered from

the Vivien operation) will account for ~57% of

projected production.

Total capital expenditure (non-sustaining) for

RMS across Mt Magnet and Edna May for

FY2019 is projected to be ~$33m. This includes

exploration expenditure of ~$13.5m.

On 10th

September 2018, RMS announced an

off-market takeover for Explaurum Limited

(EXU). The offer was for 1 RMS share for every

4 EXU shares; leaving EXU shareholders with

ownership of 19.8% of RMS on a pro forma

basis. Explaurum has a strategically located

asset (Tampia Hill with ~675koz of gold

Resources) ~130km from Edna May.

Ramelius has also signed a binding agreement

to purchase the Marda Gold Project for $13m.

The project is within trucking distance of the

Edna May mill and reinforces the growth plan

of strategic acquisitions.

mailto:[email protected]

Ramelius Resources __________________________________________________________________________________________

Taylor Collison Limited 2 | P a g e

Valuation

Price Target (Fully Diluted inc. EXU takeover)

$0.60

Spot Gold Price (A$/oz) 1,650

PRODUCTION DETAILS

Mt Magnet FY18A FY19 FY20

Mining

Ore (kt) 3,515 3,500 3,700

Grade (g/t) 1.85 1.98 1.98

Production Details:

Milled (kt) 4,005 4,200 4,200

Gold Grade (Head) (g/t) 1.71 1.65 1.69

Gold recovery (%) 94 94 94

Produced:

Gold (ozs) 208,118 210,000 215,000

Cost Details:

Mining (A$/t) 26.4 29.7 33.0

Milling (A$/t) 18.9 19.0 19.0

G&A (A$/t) `6.9 7.0 7.0

Hedging:

Ounces Hedged (oz) 89,500 110,250 30,000

Average Price (A$/oz) 1,698 1,708 1,758

Valuation:

Total Gold Revenue (A$m) 337.2 352.9 358.0

C1 Cash Costs (A$m) 187.1 199.6 211.5

All-In Sustaining Costs (AISC) (A$m) 241.9 254.4 266.3

Net Cash Flow (not inc. gold holdings) (A$m) -3.5 33.5 34.5

Net Cash Position* (A$m) 75.0 108.5 143.0

TC NPV Value (inc. cash position and takes into account current Reserves) (A$m) 317.2

*It is worth noting that RMS was estimated to have ~A$20.5m worth of gold as at 30th

June 2018

Sensitivity Modelling

Remaining gold hedging of ~140.25koz (average price of ~A$1,719/oz out to December 2019) has

been accounted for within the sensitivity model below. A discount rate of 8% was used for the NPV

calculations.

Spot Gold Price (A$/oz) for 1,500 1,550 1,600 1,650 1,700 1,750 1,800

RMS Valuation (c) 43 49 55 60 65 69 73



ASX Comparables – Gold Producers

Company RMS SLR RSG SAR SBM RRL EVN NST

FY19 Production

(Guidance) 200-220koz 140-150koz 300koz 325-345koz 350-375koz 340-370koz 720-770koz 850-900koz

AISC (A$/oz) 1,150-1,250 1,350-1,390 1,280 1,050-1,100 1,030-1,100 985-1,055 850-900 1,050-1,150

Net Cash/Gold

(A$m) 95.5 106 114.4 118 344.0 209 -72 263.0

Market Cap ($m) 251.1 261.6 799.2 1,517.5 1,766.9 1,922.0 4,463.0 5,345.8

Mt Magnet Gold Mine

Open Pit

Milky Way and Stellar West pits were the primary ore sources for Mt Magnet. Minor delays were

experienced during the June Quarter due to wet weather and the resultant wet pit floors being

mined through the transitional/fresh rock interface. Claimed high-grade ore mined at Mt Magnet

(including underground Water Tank Hill ore) was ~442,000 tonnes @ 1.55g/t (21,991oz) in the June

Quarter.

Figure 1 - Milky Way open pit

Underground

Stope production continued at Water Tank Hill during the Quarter with claimed mined production of

53,012 tonnes @ 4.70 g/t (8,034oz).

Processing

Total mill production (Mt Magnet and Vivien) was 554,579 tonnes @ 1.80 g/t (32,171oz) at a

recovery of 95.4% and AISC of A$1,243/oz in the June 2018 Quarter. Guidance for the September



2018 Quarter is approximately 30koz; expected to be delivered at an AISC of A$1,300/oz.

Throughput is expected to be lower in the September Quarterly, due to a planned 6-monthly SAG

mill re-line, which occurred in July 2018; although a higher feed grade should offset this.

Vivien Gold Mine

Ore development From the Vivien Mine was sourced from five production levels. Development in

the upper south 380 level was very encouraging with good lode mined as expected. Total claimed

mined production was 63,691 tonnes @ 6.50 g/t (13,318 oz) and ore haulage from Vivien to Mt

Magnet continued and attributed mill production was 71,549 tonnes @ 5.40 g/t (12,042 oz). AISC

continue to remain below A$1,000/oz and the current Reserve Vivien stands at 370kt @ 6.5g/t

(77koz). RMS is planning a new underground drill drive for deeper drilling down to 1km below

surface to further increase the mine life.

Figure 2 – Vivien Underground Quartz Veining

Edna May Gold Mine

Mining

Production from the Stage 2 open pit continued and claimed high-grade ore mined was 643,549

tonnes @ 1.35 g/t (28,017oz) and a further 202,482 tonnes of low-grade material at 0.47g/t

(3,075oz) was also mined during the June Quarter. The strip ratio continues to reduce as the open pit

reaches its finality.

July & August production at Edna May of 17,088oz is ahead of Guidance and mine life continues to

be the priority for Ramelius. The remainder of the Stage 2 open pit, the additional Greenfinch open

pit (discussed later in the report) and stockpiles should provide mill feed until early 2020.



Ramelius have recently announced plans to develop underground at Edna May. This allows for a low

capital cost, high grade production scenario at Edna May, which will fit in well with potential future

developments at Marda and Tampia Hill. The Resource is open at depth with possibility to extend

mine life beyond current Ore Reserve position, which stands at 398,000 tonnes @ 4.8 g/t Au for

61,000 ounces. Approximately A$20m of capital development has already been incurred by

Evolution Mining Ltd. to develop mine portal and 250m of vertical development. Ramelius is

expected to recommence underground mining operations in early-2019.

Key financials for the initial mine plan include:

Up-front Capital: A$5.9m

Operating Unit Cost: A$1,089/oz

Royalties: A$153/oz

AISC: A$1,242/oz

Figure 3 – Edna May Underground Proposed Mine Layout

Processing

Total material milled during the June Quarter was 646,507 tonnes @ 1.35 g/t for 26,596 recovered

ounces (gold poured 26,861 ounces). Unit costs continued to decrease as the Stage 2 open pit

deepened, with an AISC achieved of A$1,101/oz, giving an overall result for the nine months of

Ramelius ownership in FY2018 of 72,521 ounces poured at an AISC of A$1,203/oz.



Production Targets (quarter by quarter) – FY2019

Group gold production for FY2019 is expected to be in line with FY2018, maintaining a plus-

200,000ozpa run rate, with production expected to be 200-220koz at an AISC of A$1,150–1,250/oz.

Figure 4 – Ramelius Resources’ Projected Production Profile FY2019

Tampia Hill Acquisition

Ramelius can utilise in-house expertise and capacity to fast track development of Tampia Hill

(currently owned by Explaurum Ltd), with the proposed mine development strategically located

(~130km by road from Edna May). The acquisition is significant and will secure Ramelius’ position in

the region, with the ability to map-out a longer term project that can satisfy the current mill capacity

of 2.9Mtpa (ore production over the last 5 years has ranged between 2-3Mtpa at a head grade of

0.9-1.2 g/t).

Current JORC-compliant Resource/Reserve at Tampia Hill:

- 675koz Resources (11.7Mt at 1.79 g/t Au)

- 485koz Reserves (7.2Mt at 2.09 g/t Au)

There has also been a supergene zone (Mace) outlined in the current exploration program and this is

expected to add high grade surface ounces in the near term.

A Feasibility Study on the current Resource was completed May 2018 (by Explaurum) with the

following results:

- Simple open-pit mining, with mineralisation outcropping at surface

- 92% gold recovery

- Total gold production of 490koz

- Initial 5.3 year mine life at 1.5Mtpa ore production rate

- Pre-tax NPV of A$125m (discount rate 8%)



If Ramelius can secure the asset (the bidder’s statement has been distributed - EXU shareholders

have been advised to take no action as yet), Ramelius will investigate both options as a stand-alone

asset, as well as the more likely scenario of integrating with the current Edna May operations.

Marda Gold Project Acquisition

Marda is located 191km north-northeast of Ramelius’ Edna May operations and contains a total of

333koz of Mineral Resources at 1.96g/t Au and 151koz of Ore Reserves at 2.30g/t Au. Ramelius

Resources has signed a binding agreement to purchase the Marda Gold Project and is once again

viewed as a strategic asset in the region. The project will provide options for RMS at Edna May and

presents a similar production scenario to what has been encountered at Mt Magnet (ie; large

trucking distance to a centralised mill).

Previously completed feasibility studies undertaken by Black Oak Mining Ltd. (BOK) in 2012 and 2013

demonstrated that on a ‘stand-alone’ milling basis the oxide deposits were forecast to achieve

overall metallurgical recovery of 95%. Gravity recovery accounted for approximately 60% of the

overall gold recovery in the confirmatory test work.

Figure 5 - Marda Gold Project location relative to Edna May Mine

Other Project Developments

Greenfinch Project (Edna May)

Approval processes for the Greenfinch pit have progressed, including an EPA submission,

consultation with stakeholders, and engagement with the local Shire in respect of relocation of the

Warrachuppin Road. Hydrology and geotechnical studies have been updated and Mining Proposal

and Clearing Permit documents were submitted.

The Approvals processes are ongoing; with RMS working through both Federal and State authorities.

Ore Reserves stand at 1.7Mt @ 1.2 g/t Au for 62koz and RMS is targeting commencement of

operations during the December 2018 Quarter.



Shannon Project (Mt Magnet)

Good progress was made on the Shannon underground mine design and mining of the pit has been

brought forward to allow commencement of the underground project. Ore Reserves stand at

324,000 tonnes @ 5.2 g/t Au for 54koz and RMS is estimating Portal commencement will be in

January 2019.

Hill 60 Project (Mt Magnet)

The Hill 60 deposit is located 500m south of the current St George/Water Tank Hill underground

mine. Mineralisation is hosted within a north-striking, steep west-dipping, 3 to 10m wide BIF unit.

Previous mining includes historic shaft underground mining, occurring mainly between 1925 and

1942, with estimated production of 53koz. This was followed by mining of a 50m deep pit by

Harmony Gold in 2005. The pit targeted remnant lodes and lode margins and generated 220,000t @

2.64 g/t for 18,700 ounces. Recent drilling at Hill 60 was interpreted and a new resource model

generated. Mine design and evaluation of the model is now in progress and the approvals process

has commenced.

Exploration

Eridanus Prospect (Mt Magnet)

Spectacular high-grade results continue to be received from infill RC drilling (25m centres) at

Eridanus. The RC drilling is confirming a broad continuous supergene blanket of gold mineralisation

from 20mbs. Diamond drilling has identified a series of narrow northwest striking quartz healed

shears, quartz-tourmaline stockwork vein sets and lesser northeast striking sheared quartz healed

vein sets. Visible gold has been noted in northeast trending carbonate-quartz vein sets. An

understanding on the various vein arrays is underway but the current interpretation of shallow to

moderate southerly dipping mineralised fracture sets cut by steeper northwest and/or northeast

quartz healed veins remains unchanged.

A maiden mineral Resource/Reserve has been released:

- Resource: 3.53Mt @ 1.3 g/t Au for 146koz

- Reserve: 2.15Mt @ 1.2 g/t Au for 85koz

Lone Pine Prospect (Mt Magnet)

RC drilling was completed along the western flank of the mineralised ultramafic – porphyry contact

at Lone Pine to scope for deeper high-grade gold mineralisation below the shallow oxide pit.

Better assay results returned from the drilling include:

- 3m at 3.76 g/t Au from 72m + 2m at 7.12 g/t Au from 115m in GXRC1847, and

- 3m at 8.68 g/t Au from 154m + 4m at 5.38 g/t Au from 163m in GXRC1848

The drilling has identified a coherent 400 south plunging mineralised shoot that remains open with

depth. True widths are estimated to be 65% of the reported down hole intersections.



Resources/Reserves (August 2018)

Resources

Reserves



Directors and Management

Mark William Zeptner

BEng (Hons) Mining, MAusIMM, MAICD

MANAGING DIRECTOR

Mr Zeptner has more than 20 years’ experience in senior operational and management positions

associated with major gold and nickel assets in Australia and offshore and has been a director since

2015. Mr Zeptner is the Company’s Chief Executive Officer.

Michael Andrew Bohm

B.AppSc (Mining Eng.), MAusIMM, MAICD

INDEPENDENT NON-EXECUTIVE DIRECTOR

Mr Bohm is a graduate of the WA School of Mines and has been a director since 2012. Mr Bohm

brings to the Board his extensive experience as a mining professional with extensive corporate and

operational management skills in the minerals industry in Australia, South East Asia, Africa, Chile,

Canada and Europe. Mr Bohm is Chairman of the Nomination and Remuneration Committee and

member of the Audit and Risk Committee.

Kevin James Lines

BSc (Geology), MAusIMM, MAICD

INTERIM INDEPENDENT NON-EXECUTIVE CHAIRMAN

Mr Lines has extensive experience in mineral exploration and mining for gold, copper, lead, zinc and

tin and has been a director since 2008. Mr Lines brings to the Board his extensive experience in the

assessment and evaluation of exploration projects and development of properties and mining

operations overseas. Mr Lines was appointed Independent Non-Executive Chairman following the

passing of Inaugural Chairman, Bob Kennedy. Mr Lines is Chairman of the Audit and Risk Committee

and the Due Diligence Committee and member of the Nomination and Remuneration Committee.

David Clifford Southam

B.Comm, CPA, MAICD

INDEPENDENT NON-EXECUTIVE DIRECTOR

Mr Southam is a Certified Practising Accountant with more than 25 years’ experience in accounting,

capital markets and finance across the resources and industrial sectors. Mr Southam has been

intimately involved in several large project financings in multiple jurisdictions and has completed

significant capital market and M&A transactions.

Domenico Antonio Francese

B.Ec., FCA, FFin, FCIS, FGIA.

COMPANY SECRETARY

Mr Francese is a Chartered Accountant with an audit and investigations background and more than

12 years’ experience in a regulatory and supervisory role with ASX. He has been employed by

Ramelius Resources Limited since 1 April 2003 and was the inaugural Chief Financial Officer until 1

November 2015. Mr Francese is a Fellow of the Institute of Chartered Accountants in Australia and



New Zealand, a Fellow of Finsia, a Fellow of the Governance Institute of Australia and a Fellow of the

Chartered Institute of Secretaries.

Tim Manners

BBus (Accounting), FCA, AGIA, MAICD.

CHIEF FINANCIAL OFFICER

Mr Manners is a finance professional with over 20 years experience in accounting, corporate finance

and financial management functions in the resources industry. Mr Manners has been involved in

exploration, developing and producing companies both in Australia and overseas. Mr Manners has

held the senior financial position in companies within the precious, base and bulk commodities

sectors, including Gold Road Resources Ltd, Phoenix Gold Ltd, Bathurst Resources Ltd and Perilya Ltd.

Mr Manners joined Ramelius Resources Limited in July 2017 and is a Fellow of the Institute of

Chartered Accountants in Australia and New Zealand.

Duncan Coutts

BEng (Hons) Mining, MAusIMM, MAICD

CHIEF OPERATING OFFICER

Mr Coutts is a qualified mining engineer with more than 20 years resource industry experience. He

holds a Bachelor of Engineering (Hons) in Mining Engineering from the Western Australian School of

Mines in Kalgoorlie. Recently he has been providing technical and operational consulting services to

iron ore and gold focused mining companies. Prior to this consulting work, Duncan was CEO of the

privately owned iron ore producer Kimberley Metals Group, located in the Kimberley region of

Western Australia. Mr Coutts has also held positions of General Manager – Development with ASX

listed Galaxy Resources Ltd, Chief Development Officer with ASX listed Metals X Ltd, and Chief

Operating Officer for Harmony Gold Australia where he was responsible for the management and

project development of operations in Western Australia, Northern Territory and Papua New Guinea.



Disclaimer

The following Warning, Disclaimer and Disclosure relate to all material presented in this document and should be read

before making any investment decision.

Warning (General Advice Only): Past performance is not a reliable indicator of future performance. This report is a

private communication to clients and intending clients and is not intended for public circulation or publication or for the

use of any third party, without the approval of Taylor Collison Limited ABN 53 008 172 450 ("Taylor Collison"), an Australian

Financial Services Licensee and Participant of the ASX Group. TC Corporate Pty Ltd ABN 31 075 963 352 (“TC Corporate”) is

a wholly owned subsidiary of Taylor Collison Limited. While the report is based on information from sources that Taylor

Collison considers reliable, its accuracy and completeness cannot be guaranteed. This report does not take into account

specific investment needs or other considerations, which may be pertinent to individual investors, and for this reason

clients should contact Taylor Collison to discuss their individual needs before acting on this report. Those acting upon such

information and recommendations without contacting one of our advisors do so entirely at their own risk.

This report may contain “forward-looking statements". The words "expect", "should", "could", "may", "predict", "plan" and

other similar expressions are intended to identify forward-looking statements. Indications of and guidance on, future

earnings and financial position and performance are also forward looking statements. Forward-looking statements,

opinions and estimates provided in this report are based on assumptions and contingencies which are subject to change

without notice, as are statements about market and industry trends, which are based on interpretations of current market

conditions. Any opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but

are subject to change without notice and Taylor Collison assumes no obligation to update this document after it has been

issued. Except for any liability which by law cannot be excluded, Taylor Collison, its directors, employees and agents

disclaim all liability (whether in negligence or otherwise) for any error, inaccuracy in, or omission from the information

contained in this document or any loss or damage suffered by the recipient or any other person directly or indirectly

through relying upon the information.

Disclosure: Analyst remuneration is not linked to the rating outcome. Taylor Collison may solicit business from any

company mentioned in this report. For the securities discussed in this report, Taylor Collison may make a market and may

sell or buy on a principal basis. Taylor Collison, or any individuals preparing this report, may at any time have a position in

any securities or options of any of the issuers in this report and holdings may change during the life of this document.

The preparation of this report was funded by ASX in accordance with the ASX Equity Research Scheme. This report was

prepared by Taylor Collison and not by ASX. ASX does not provide financial product advice. The views expressed in this

report do not necessarily reflect the views of ASX. No responsibility or liability is accepted by ASX in relation to this report.

Analyst Interests: The Analyst(s) may hold the product(s) referred to in this document, but Taylor Collison Limited

considers such holdings not to be sufficiently material to compromise the rating or advice. Analyst(s)’ holdings may change

during the life of this document.

Analyst Certification: The Analyst(s) certify that the views expressed in this document accurately reflect their personal,

professional opinion about the financial product(s) to which this document refers.

Date Prepared: October 2018

Analyst: Ryan Armstrong

Release Authorised by: David Cutten

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