RRL has released the definitive feasibility study (DFS) on its McPhillamys gold project in NSW. The DFS confirmed pre-production capex of A$996m, with key operational metrics including the 7.0mtpa process plant capacity and annual production of 187kozpa in line with our base case. We have made some minor adjustments to our assumptions for McPhillamys, which increases our NPV from A$20m to A$112m. RRL has indicated it remains committed to maximising shareholder returns and given the modest NPV, we do not expect the project to be approved under the current metrics. RRL has pushed back FID until FY26, and we believe a larger reserve is needed before the project could get the green light. We do not currently include McPhillamys in our base case production and earnings forecasts for RRL. We reiterate our Buy rating and lift our price target 4% to A$2.50 after incorporating updated assumptions for McPhillamys.
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