Ramelius Resources enters FY27 unhedged after record margin and A$256m shareholder return

Ramelius Resources Limited (ASX: RMS) delivered a record 74% underlying EBITDA margin in FY26 even as gold sales fell 37%, demonstrating how sharply higher Australian-dollar gold prices cushioned the earnings impact of a smaller production base following the wind-down of Edna May. Underlying EBITDA reached A$765.4 million, only 7% below the prior year, although underlying net profit after tax declined 33% to A$319.9 million and underlying earnings per share dropped 58% to 17 cents.

The divergence between volumes and margins is the central feature of the result. Ramelius sold 190,261 ounces compared with 302,882 ounces in FY25, but its realised gold price climbed 36% to A$5,400 an ounce from A$3,963. All-in sustaining costs increased 28% to A$1,983 an ounce, yet underlying EBITDA per ounce sold jumped about 48% to A$4,022 from A$2,726 because the gold-price uplift substantially exceeded the increase in costs.

The company also returned A$255.1 million through dividends and share buybacks during the financial year, more than 3.6 times the A$70.3 million returned in FY25. Its final fully franked dividend of 3 cents per share takes FY26 distributions to 6 cents, while A$141.7 million has been deployed into buybacks.

How did Ramelius keep EBITDA so resilient after selling 37% less gold?

The answer lies primarily in unit economics rather than production growth. Ramelius’ realised gold price increased by approximately A$1,437 an ounce year on year, while AISC increased by about A$432 an ounce. The resulting expansion in the spread between realised pricing and production costs allowed the company to generate materially more EBITDA from each ounce even though overall ounces sold were substantially lower.

That explains why underlying EBITDA fell only 7% while gold sales fell 37%. The EBITDA margin increased from 69% to 74%, a five-percentage-point expansion, as Ramelius prioritised higher-grade, higher-margin ounces. Management attributed lower production largely to Edna May having moved into care and maintenance during the prior year, while the A$300 million June 2026 sale of Edna May was not included in the FY26 financial result.

The economics could become still more exposed to spot gold prices in FY27. Ramelius said its hedge-book commitments were reduced during FY26 and that no gold forward contracts are in place for the coming year, increasing both the potential benefit from elevated Australian-dollar gold prices and the downside sensitivity if bullion weakens materially.

Why did Ramelius’ statutory profit fall much further than underlying EBITDA?

Statutory net profit after tax was A$118.8 million, substantially below the A$319.9 million underlying result, because FY26 contained several large adjustments associated with the transformation of the portfolio. The largest was A$133.2 million of Spartan Resources acquisition costs, including A$131 million of stamp duty, followed by a A$55.4 million non-cash fair-value adjustment to pre-existing Spartan royalty obligations and A$28.4 million associated with closing gold forward contracts.

Those items mean the statutory result understates the operating profitability generated by the underlying mines, but they should not simply be ignored. The Spartan combination was a major strategic transaction and incurred genuine economic costs, even if some of those expenses are not expected to recur annually.

The difference also helps explain why conventional trailing earnings measures can look unusually volatile during a period of portfolio restructuring. Investors assessing FY27 will need to separate the enlarged operating platform created by Spartan from the one-off costs required to establish it.

Can Ramelius keep returning cash while capital investment rises?

Underlying free cash flow declined 43% to A$393.3 million as capital investment cash flow increased 22% to A$396.7 million. Ramelius said spending on plant, equipment, mine development and exploration reached A$315.8 million, almost twice the A$160.5 million deployed in the prior year.

Against that A$393.3 million underlying free cash flow figure, the A$255.1 million of dividends and buybacks represented approximately 65%. That is a substantial shareholder-return commitment, although the company still finished June with A$649.6 million of cash and bullion. The balance was 20% below the prior-year A$809.7 million after capital investment, shareholder returns, the Spartan combination and tax payments.

The capital burden is unlikely to disappear immediately. Ramelius expects the Galaxy mine life to extend to 2032 and plans to lift productivity toward approximately 800,000 tonnes a year from around 600,000 tonnes currently. That requires approximately A$30 million of additional sustaining capital in FY27 and is expected to add around A$130 an ounce to AISC.

Why is Ramelius’ September FY27 guidance now more important than the FY26 result?

The company plans to release an updated four-year production outlook through FY30 next month, including FY27 production, cost and capital guidance. That update will provide the first clearer numerical view of the larger Ramelius following the Spartan combination and the disposal of Edna May.

Investors will be looking for evidence that production growth at Dalgaranga and increased capacity around the Mt Magnet hub can offset industry cost inflation, which Ramelius currently estimates at around 8% in FY27. Labour, diesel and gold-price-linked royalties are among the areas applying pressure.

Ramelius shares were around A$3.98 following the result, leaving the market to weigh a weaker headline profit result against record underlying margins, a sizeable cash balance and a substantially reshaped production platform. The crucial FY27 question is therefore not whether FY26 profit declined, which it clearly did, but whether the enlarged asset base can rebuild ounces rapidly enough to combine higher production with the exceptional per-ounce economics delivered during the latest year.