RRL’s 2QFY25 preliminary result was impressive with gold production 12% higher than we had forecast, which enabled the company to report record cash generation. We had assumed higher gold sales vs production to reverse the trend reported in the 1QFY25, which resulted in the record cash result coming in just 4% higher than we had forecast. As a result, we have made only modest changes to our earnings forecasts, with RRL reiterating it FY25 guidance ranges. RRL’s record cash balance now accounts for ~27% of its current market cap and we expect RRL will look to repay its A$300m debt facility a few months ahead of schedule. The company is generating strong free cash flow, with the company trading on FY25 and FY26 free cash flow yields of 17% and 20%, respectively. We are reiterating our BUY rating on RRL and A$3.30 price target.
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