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Gold Trading at Record Levels; A Look at 3 ASX Gold Stocks

  • April 20, 2020 12:51 AM AEST
  • Team Kalkine
Gold Trading at Record Levels; A Look at 3 ASX Gold Stocks

Gold prices in Australia are touching record high levels these days. The uncertainty around the Covid-19 impacts is one of the major reasons why investors are rushing to buy this safe haven commodity. Many experts believe that this could turn out to be good news for metal and mining players which are involved in the exploration and production of gold, as higher gold prices will translate into higher revenues, boosting mining stocks and investor returns. In the light of above-mentioned scenario, we have screened few ASX listed gold companies which we believe investors should know about. Let us take a look at these stocks and their recent updates.

Gold MTF non-AMP

Perseus Mining Limited (ASX: PRU)

Perseus Mining Limited is a West African gold producer which currently has a market cap of around $1.19 billion on Australian Securities Exchange (ASX). Over the last one month, the stock price of PRU has increased substantially, rising by around 40% over the period.

Currently, due to the travel restriction put by the Government amid the Covid-19 Pandemic, PRU’s local and foreign employees are having difficulty in movement. However, the supply chains for each of its operating sites remain open in both Ghana and Côte d’Ivoir and a series of protocols at each of its operating sites are being implemented to eliminate the possibility of infection of members of its workforce and to ensure business continuity.

In the first half of FY20, the company reported net profit after tax $30.410 million, up 193% on the previous corresponding period (pcp). During the period, PRU witnessed 43% growth in operating EBITDA resulting from a 25% decline in the cost of sales, slightly offset by a 3% decrease in revenue due to 18% lower sales, timing only, offset by 13% higher average gold sales price.

FY20 Highlights (Source: Company Reports)

At 31 December 2019, the total value of cash and bullion on hand was $114.9 million and total net assets was $808.7 million.

Ramelius Resources Limited (ASX: RMS)

Ramelius Resources Limited is a Western Australian gold producer that operates the Mt Magnet, Vivien, Marda gold mines, Edna May and associated processing plants around Western Australia (WA). The company’s Board is focused on growing its investment in the company by prudent use of capital on exploration, asset acquisition and corporate activities.

For the year ended 31 December 2019 or FY29, the company reported a net profit after tax of $21.8 million and EBITDA of $112.2 million. During the year, the company reported gold sales of 203,318 ounces generating revenue of $352.8 million, up 3% on FY18. During the year, the company sold 85,692 ounces at an average realised gold price of A$1,844 generating strong a margin of $604 per ounce above AISC per ounce. As at 31 December 2019, the company had net cash and bullion of $87.7 million with zero debt.

Recently RMS via its wholly-owned subsidiary Mt Magnet Gold Pty Ltd offered to purchase all of the Shares in Spectrum Metals Limited (ASX: SPX) in exchange for 1 Ramelius Share for every 10 Spectrum Shares plus $0.017 cash for each of the Spectrum Share. This merger is expected to increase the market capitalization of Ramelius Resources Limited which is like to improve the attractiveness of the Company to domestic and foreign institutional investors.

In the first quarter of FY20, the company produced 51,825 ounces of gold, in line with the guidance of 50 – 55,000 ounces. During the period, the company took a prudent approach to capital management by drawing $32.5 million from the Syndicated Facility in place. As at 31 March 2020, the company’s balance sheet was in a strong position with net cash and gold of $90.4 million.

The company is of the view that it is well placed to accommodate both future mine development decisions and acquisition opportunities while providing a significant buffer during the current COVID-19 pandemic.

Dacian Gold Limited (ASX: DCN)

Australian gold miner, Dacian Gold Limited recently announced an institutional placement and 1 for 1 Entitlement Offer to raise up to approximately A$98 million which will be used for partial repayment of Dacian’s Project Debt Facility, pre-stripping activities at the Doublejay open-pit, targeted exploration activities and working capital. Further this offer will help the company in improving its cash position.

In FY20, the company expects its production to be in between 138,000 – 144,000 oz and with MMGO AISC to be in between $1,550 – $1,650/oz. From FY21-FY23, the company’s average expected annual production is expected to be around 110,000oz @ AISC $1,350/oz.

The stock of DCN is currently trading close to its 52 weeks low price of $0.360.

Gold Road Resources Limited (ASX: GOR)

Mid?tier gold producer and exploration company Gold Road Resources Limited recently provided an exploration update on 7 April 2020, wherein, it informed that it has been pro-actively prepared for COVID-19, with extensive measures to ensure the welfare of its people and the community are in place, and till now there has been no material impacts on its exploration work programmes at Yamarna.

Gold Road entered FY20 in a strong financial position, with a cash balance of $101 million and net cash of $21 million. Last year, the company sold 49,565 ounces of its share of gold from Gruyere at an average price of $2,038 per ounce (combination of spot and hedged sales). At the end of 2019, Gold Road had gold forward sales contracts totalling 111,700 ounces at an average price of $1,844 per ounce, spread for delivery between January 2020 and September 2022.

In 2020, the company has an exploration budget of $26 million which will be used for the discoveries on the Yamarna belt.

Recently in the March quarter, the company completed 3 diamond holes and 1 diamond tail for 926 metres of drilling targeting interpreted high-grade plunging shoots associated with extensional and folded vein sets in the hangingwall to the high-grade Main Lode. Best intersections include:

  • 5.62 metres at 36.64 g/t Au from 203.80 metres (19WDDD0048)
  • 4.64 metres at 43.78 g/t Au from 266.46 metres (19WDRC0243)
  • 4.34 metres at 13.04 g/t Au from 191.66 metres (20WDDD0049)

In the past three months, GOR stock price has increased by around 26.87% on ASX. The stock is trading near to its 52 weeks high price of $1.830.

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