Regis Resources (RRL) reported solid June Q production of 91koz at an AISC of $1,189/oz (vs March Q 91koz @ $1,019/oz). Production was in line with the previous Q, but with higher costs, due to lower production and grades at Duketon South (DSO) and one-off costs. FY19 production of 363koz at AISC $1,029/oz was at the higher end of 340-370koz production guidance and mid-point of forecast costs. Cashflow from operations of $85.2m was lower vs the March Q at $89.3m from lower received gold price of A$1,832/oz (vs $1,838/oz in March Q). RRL is a predictable and efficient producer, but the share price has run strongly ahead of our valuation. Further upside could be achieved by a line of site to production at McPhillamys, exploration success at Rosemont deeps or opportunistic M&A. We revise our recommendation down to HOLD (from BUY) after share price strength. We revise our target price to $5.94ps
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