It has been a rocky beginning to the year as far as markets are concerned. Volatility has crept up and it is largely driven by inflation fears. Gold, an age-old inflation hedge, is thus in full focus. As at the time of this post, Gold trades at US$1810 an ounce. Prices have dropped as US Treasury Yields and the dollar gained on hawkish expectations from the Fed.
The move came after Fed chair Jerome Powell said last week that the US economy was ready for the start of tighter monetary policy, with other Fed officials signalling the first potential rate hike in March. US inflation also rose to a multi decade high of 7% in December. Gold is thus in full focus and with inflation edging higher, it is time to consider the yellow shiny metal stocks.
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 had slid. However, NCM shares have now gained some momentum. NCM shares currently trade at $24.22 a share with a dividend yield of 3%. This may be the right time to consider one of the best gold stocks on the ASX.
Northern Star Resources is the second largest gold miner in Australia. After its recent merger with Saracen wherein NST acquired 100% of Saracen, Northern Star has grown further in stature. They are a proven performer with data going back years to back up their operation and mining capabilities.
Northern Star Resources operates in Western Australia and Northern Territory, Down Under and also in Alaska, USA. Together, they have 4 operating mines where they hold 100% interest in the Western Australian and Alaskan mines and 50% interest in their Northern Territory mine that is being operated as a joint venture.
Northern Star Resources has a very simple business model – they operate 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. The post-merger integrations are said to be running ahead of schedule and all their mines have a high life of mine with over 10 years. The growth opportunities are present as well, supported by aggressive explorations. For FY2021, the exploration budget was set at A$150 million.
Northern Star 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. They have 3.2 Moz in surface stockpiles and a further M&As to expand further are definitely on the cards.
NST shares currently trade at $9.08 a share and represent good long-term value.
In stark contrast to the sheer size of NST and NCM, Amani gold is a new kid on the block. The company is in the exploratory phase with an aim to build a major gold resource base with +10Moz Au assets in the DRC.
With a new Board and Management, Amani Gold is focused on growth through three tiers : Discovery, Acquisition & Mining.
Discovery – Exploration, with an emphasis on geochemical and geophysical surveys and extensive drilling campaigns.
Acquisition – Dedicated team, to identify and acquire quality gold assets in the DRC.
Mining – Expand Giro Gold Project JORC resources and target near term mining operations.
The Company has plenty of prospective areas in which to increase the global resource at our Giro Gold Project, such as deeper drilling at our flagship Kebigada deposit. In 2019, our target is to substantially increase the resources at Giro via extensive exploration and drilling within the Giro Goldfields tenements and complete a DRC Feasibility Study. Amani has a clear aim of developing a profitable mining operation in the DRC.
ANL shares currently trade at $0.001 a share with a market cap of $34 million.
There are two types of gold ETFs – one that gives direct access to the commodity and another that exposes you to gold stocks. Your risk profile and financial goals determine the best option for you.
Northern Star, Newcrest Mining, Chalice Mining and Evolution Mining are some of the top gold mining stocks on the ASX.
Gold stocks play a key role in most long-term investor portfolios.