The cycle is changing from growth to value stocks, and exposure to mining stocks is now critical. With commodity prices soaring and inflation on the horizon, we will be enveloped in a commodity super cycle. Iron Ore, Copper, Natural Gas, Rare Earth Metals are all found in abundance Down Under and the ASX is home to the biggest miners in the world and some of the top emerging mining stocks. These companies are estimated to keep printing cash and are passing on that cash to their shareholders.
Commodity prices are soaring with inflation fears affecting prices. Gold prices have seen a resurgence with the shiny metal now trading in the range of US$1860 an ounce.
Newcrest is the largest gold miner in Australia and the 6th largest in the world. They produced 2.2 Moz of gold in FY2020 – greater than the target that Northern Star are aspiring to achieve. 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 largest asset is Cadia, and Cadia still has over 15 years of high production under its belt and about 37m ounces of gold left in reserves. They have expansion projects that are currently in progress at Cadia and Lihir, and several other exploration projects in the pipeline that can significantly increase their production.
The firm has also altered their dividend policy. This change in policy allows shareholders to benefit from the stronger free cash flows that result from higher gold prices and is supported by Newcrest’s robust balance sheet with its minimal near-term debt obligations. While Newcrest is by no means a dividend stock, a sustainable increase in dividends underpinned by high gold prices for a couple of years is an added benefit to shareholders. NCM shares have gained 11% this year and currently trade at $28.66 a share.
Northern Star 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 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. 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 are now trading at $11.45 a share – up from $9 in March.
Evolution Mining operates five 100% owned gold mines – Cowal in New South Wales, Mt Carlton and Mt Rawdon in Queensland, Mungari in Western Australia, and Red Lake in Ontario, Canada. Along with gold, EVN also explores for silver and copper deposits.
Evolution reported a 29% growth in revenues in FY2020. They have a 3 point plan in place that should deliver significant growth to the firm. Production is planned to increase to over 800,000 ounces during the three-year period to FY2023. Growth is expected to be driven by the initiation of the Cowal underground mine in late FY2022 and execution of the Red Lake transformation plan.
The company has declared a final, fully franked FY2020 dividend of 9 cents per share, amounting to $153.4 million. This results in a record full-year dividend for FY20 of 16 cents per share, fully franked, which equates to a 68% increase over FY2019. Coming in with a fully franked annual dividend yield of 3.38%, Evolution Mining fits into most growth and dividend portfolios.
EVN shares are up 14% in the last 3 months and over 6% this week, and currently trade at $5.37 a share!
Mining is not only about gold. With several macro economic factors supporting the broader mining sector, our analysts have come out with the top 3 mining stocks to buy for long-term investors. Click here to download your free report in just a couple of clicks!