Ramelius Resources (ASX:RMS) Rallies After A$250m Capital Return Program: Should You Buy the Gold Miner?

Ramelius Resources (ASX: RMS) jumped to an intraday high of A$3.71 this week before closing at A$3.57, up 5.6%, after announcing a A$250 million share buyback and doubling its minimum dividend to 2 cents per share. For gold investors, this signals management believes the stock is cheap and cash generation can reward shareholders while funding growth.

The buyback starts on 24 December 2025 and runs through June 2027, targeting up to 73.96 million shares (3.84% of shares on issue). Combined with a new dividend floor of around A$38.5 million per year, Ramelius is putting real money behind shareholder returns.

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Why the A$250m Buyback Signals More Than Spare Cash

What makes this move stand out is how Ramelius has reshuffled its priorities. Shareholder returns have jumped to the number two spot, up from number three, sitting just behind reinvestment in the business. In our view, this tells investors the board sees plenty of cash flow runway ahead.

Managing Director Mark Zeptner put it simply: “This capital management initiative is underpinned by our track record of consistently delivering strong free cash flow and our confidence that it will continue into the future.”

The balance sheet backs that up. At the September quarter end, Ramelius held A$827.7 million in cash and gold, with total liquidity above A$1 billion. FY25 delivered a record operating cash flow of A$770.5 million on revenue of A$1.2 billion. With almost no debt (debt-to-equity of just 0.03), the company can comfortably fund both growth and returns.

Ramelius Targets 500,000 Ounces as Production Grows

The buyback makes even more sense when you look at where Ramelius is heading. The company is working towards its 5-Year Growth Pathway to produce 500,000 ounces per year, a big step up from the record 301,664 ounces it produced in FY25.

With Australian dollar gold prices above A$6,300 per ounce, mid-tier producers like Ramelius are making strong profits. FY25 all-in sustaining costs came in at just A$1,551 per ounce, among the lowest in Australia, leaving healthy margins even if gold prices drop.

The Investor’s Takeaway for Ramelius Resources

For investors thinking about buying at current levels, we believe the setup looks attractive. Analyst consensus has the average price target at A$4.33, with recent ratings including a Buy at A$4.50, suggesting 20-25% upside from today’s close. Most covering analysts rate the stock a buy.

The buyback adds a layer of price support. When a company commits to buying back nearly 4% of its own shares, it creates steady buying pressure that can cushion the stock during weak markets and should lift earnings per share over time.

That said, two risks are worth watching. Gold price volatility is the biggest swing factor; any sharp decline would pressure margins and could slow the pace of the buyback. In addition, Ramelius is still integrating its A$2.4 billion Spartan Resources acquisition, making execution critical to achieving production targets.

Overall, Ramelius looks well-suited for investors wanting gold exposure backed by a shareholder-friendly team. The strong balance sheet, growing production, and clear focus on returns make a solid case at today’s price.