It has been a shaky start for the ASX this week. Today, the ASX dipped by 0.6% at the time of writing this piece. RBNZ’s rate hike seems to have triggered a shift in momentum which has resulted in the banks and travel stocks taking the hit.
A2 Milk shares were the worst performing today as the stocks dipped over 7%, while CBA dropped by 2%. Travel stocks Webjet and Flight Centre have each dropped by over 6%.
Gold prices have continued to be under pressure in 2021. In the last few months, Gold prices have dipped. The 1 month performance of gold sits at -2.5%. Given the risk in the markets now, gold may have a bullish run coming soon.
Newcrest Mining is one of the largest gold mining companies in the world. It is the largest in Australia, producing 2.2 million ounces of gold in FY2020. Newcrest owns and operates a portfolio of predominantly low cost, long life mines and has a strong pipeline of Brownfields and Greenfields exploration projects.
Their reserve and resource base is strong, with current gold reserves representing more than 24 years of production at current rates. Newcrest uses a variety of efficient mining methods for large ore bodies.
The company primarily owns and operates mines and projects located in Cadia and Telfer, Australia; and Lihir, Papua New Guinea. It also holds 70% interest in the Red Chris mine project located in British Columbia, Canada.
Newcrest’s cash flow is also booming, generating a record annual $1.1 billion of free cash flow throughout FY21. The firm saw record mine and mill performance at Cadia. This ensured that Newcrest’s bottom line benefitted massively, delivering a statutory net profit after tax (NPAT) of $1.2 billion, up 83% on the prior year. On an underlying basis, NPAT still grew at an impressive clip, up 55%.
Newcrest providend a comprehensive table for their guidance expectations for FY22. The company is guiding for total gold production between 1.8 million and 2 million ounces, and copper production between 125,000 and 130,000 tonnes. AISC, which includes production stripping and sustaining capital, is expected to land in the range of $1.7 billion to $1.9 billion.
Operationally, Newcrest has not put a foot wrong. However, given the weakness in gold prices, Newcrest shares have slid. NCM shares currently trade at $23.18 a share with a dividend yield of 3.24%. This may be the right time to consider one of the best gold stocks on the ASX.
Northern Star is the second-largest gold miner in Australia. After its recent merger with Saracen, Northern Star has grown further in stature. The company is a proven performer with data going back years to back up its operation and mining capabilities.
Northern Star has a very simple business model – the firm operates 3 large-scale production centres while striving to hit the 2Moz per annum production capacity. Collectively, with three Tier-1 assets in Tier-1 locations, Northern Star Resources looks exceptionally strong. What is good about Northern Star is that it is running a growing business that has falling costs and expanding margins. The firm is targeting a 30% growth in production in the next 3 years alone. The company owns 3.2 Moz in surface stockpiles and further M&As to expand further are on the cards.
Northern Star’s FY21 performance saw Cash Earnings were A$648 million. This reflected record production volumes and a steady Australian-dollar gold price. Statutory NPAT came in at A$1.03B. A new Dividend Policy was introduced, targeting a total annual dividend payment of 20-30% of Cash Earnings.
FY22 guidance came in at 1.55-1.65Moz at an AISC of A$1,475-$1,575/oz. FY22 net growth capital is A$570. Northern Star is a growing company with significant boost to production levels coming up. NST shares trade at $9.01 a share and is a gold stock to buy now for most investors.