RRL’s 2QFY25 result had been largely pre-released earlier this month, with the company reporting strong production and record cash flow generation. Cash and bullion at the end of December was an impressive A$529m, enabling the early repayment of its A$300m debt in early January, making RRL debt free. Guidance ranges for FY25 remain unchanged, which implies 2HFY25 production will be 6-21% lower than the 1HFY25 result. We have flattened our production outlook for both Duketon and Tropicana, which should see RRL produce 355-365koz for the next four years. Depreciation rates were much higher than we expected in the 2QFY25 and incorporating the higher rate and the changes to our production forecasts drive material cuts to earnings. The rise in spot gold prices offset this with our price target rising 6% to A$3.50, however following a ~25% rise in its share price, we downgrade our recommendation from Buy to HOLD.
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