Gold stocks provides a way to investors of diversifying their portfolios, without putting their investment in the commodity market, which reacts sharply over the global events and is considered as more volatile than conventional equity markets. Thus, the commodity associated stocks safeguard the investors from the high volatility of the commodity market and give a relatively smooth ride to the investors.
Gold miners face various problems but not without potential solutions. One such problem of a gold miner is to replenish the gold that has been mined already. The potential solution of this problem is to either explore more gold through exploration activities and upgrade ore reserves either in terms of numbers or grade or acquire other quality projects.
Evolution Mining Limited
Evolution Mining Limited (ASX: EVN) controls five gold operations across Queensland, New South Wales and Western Australia. The company controls and operates Cowal gold operations, which is 350Km west of Sydney Australia and is on the conventional lands of Wiradjuri People.
Cowal Gold operations is a wholly-owned operation of the company, which hosts a sequence of Ordovician rocks and operates at a Nominal treatment rate of 7.5 million tonnes per annum. The company produced 258,000 ounces of gold from the open pit operations of Cowal in FY2018 and kept the production guidance in the range of 240,000 – 250,000 ounces of gold in FY2019E.
Cracow Gold Operations is another wholly-owned project of the company, located 500Km north-west of Brisbane, Queensland. The project hosts mineralisation in steeply dipping low sulphidation epithermal veins and operates at a Nominal treatment rate of 550-kilo tonnes per annum. Cracow operations produced ~90,000 ounces of gold in FY2018, and the company kept the production guidance in the range of 80 – 85Koz for FY2019E.
Evolution operates another significant gold operation known as Mungari Operations, which is another 100% owned operation of the company and operates at a nameplate processing capacity of 1.5Mtpa and is currently operating at 1.7Mtpa capacity. The company produced 118,000 ounces of gold in FY2018 from the operations and kept the production guidance in the range of 125 – 135Koz for FY2019E.
Apart from two other such operations, the company recently expanded the gold production capacity by acquiring a stake in Tribune Resources.
The company’s stock closed at A$3.660 on 29 March’19, down by 3.43%. The stock has been on uptrend over past six months, offering return of 43%.
Regis Resources Limited
Regis Resources Limited (ASX: RRL) operates various projects in Duketon Area and have many major projects such as Moolart Well, Garden Well, Rosemont, etc. The company contains significant mineral resources to operate and can possibly take advantage of high gold prices into account and strengthen their balance sheet and lock higher cash flows.
The Australian Institutions holds a 29% stake in the company and the U.S. institutions holds a 27% stake in the company.
Regis resources achieved a gold production of 361,373 ounces of gold in the financial year 2018, with an AISC of A$901 per ounces. However, the company is anticipating for stagnant production in the financial year 2019 with the production guidance range of 340,000 – 370,000 ounces of gold with an AISC of A$985 – A$1,055 per ounce. The company is a debt-free company with A$207 million in cash and bullion. The higher cash could give the company leverage to operate well and expand in terms of the acquisition or extend its mineral reserves in terms of high exploration activities.
RRL closed the day’s session in red at A$5.300 (as on 29 March’19), down by 2.03%. The stock has soared by 45.43% over last six months.
Saracen Mineral Holdings Limited
Saracen Mineral Holdings Limited (ASX: SAR) operates various projects across the Carosue Dam and Thunderbox and is a debt-free company with A$142 million in cash bullion and investment, which could give the company to expand its operations and explore more to take advantage of high gold prices.
The 83% of the Carosue Dam Reserves is in twin deposits of Karari-Dervish and accounts for 1 million ounces of gold. The Karari open pit and dervish underground mine have similar geological characteristics. The company aim to produce an overall 400 kilo ounces of gold and kept the production guidance for the financial year 2019 in the range of 345,000 – 365,000 ounces of gold with an AISC of A$1,050 – A$1,100 per ounce.
With gold extending its rally, the gold miners on ASX will be eying on the commodity and strategize to raise their production and ramp up the activities to step in the gold rush.
SAR closed at A$2.900, down by 3% on 29 March’19. Over last six months, the company’s share price has witnessed a growth of 60.32%.
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