The gold spot price has pushed higher to almost US$1,900 after dipping as low as US$1756 in November.
Despite gold holding never before seen levels, and US Federal Reserve continuing to expand its balance sheet, Citi believes that gold prices will peak in 2021 and weaken through 2022.
Here are the ASX gold shares that have had share price targets adjusted to reflect lower gold prices.
Newcrest Mining Ltd (ASX: NCM)
The Newcrest Mining share price target was lowered from $35.50 to $32.00 with a buy rating. Its shares are currently trading at $26.74, so the price target still represents an upside of 19%.
Newcrest is Australia’s largest gold producer with one of the lowest all-in sustaining costs (AISC) in the world of just US$980 per ounce.
The company continues to explore a number of organic growth opportunities to leverage its low costs and current gold prices. This includes a secondary listing on the Toronto Stock exchange to support its growth strategy in the Americas and broaden its access to the large North American capital pool.
Saracen Mineral Holdings Limited (ASX: SAR) and Northern Star Resources Ltd (ASX: NST)
Saracen and Northern Star are currently working through a proposed merger under which Northern Star will acquire all shares of Saracen. This merger is forecast to be completed by 15 February 2021.
Saracen was upgraded from neutral to buy, but its share price target was lowered from $6.20 to $5.30 to reflect lower gold prices. The lower price target still represents a 13% upside to its price of $4.68 at the time of writing.
Northern Star was also upgraded from neutral to buy, with its price target lowered from $15.90 to $13.90. At its current price of $12.40, this represents an 12% upside.
Evolution Mining Ltd (ASX: EVN)
The Evolution Mining share price target was lowered from $5.50 to $4.90 with a neutral rating. This represents a downside of 2.4% to its current price of $5.02.
Evolution is often regarded as one of the lowest cost gold producers in the world with its September quarter AISC of A$1,198 per ounce (US$857/oz).
While the company’s growth might not be as explosive as Northern Star or Saracen, it has flagged that its Cowal and Red Lake projects will drive significant organic growth over the next three years.
Evolution delivered total gold production of 746,463 ounces in FY20 and looking ahead, expects to deliver:
3-year outlook |
FY21 |
FY22 |
FY23 |
Production (oz) |
670,000–730,000 | 700,000–770,000 | 790,000–850,000 |
AISC ($/oz)2 |
1,240–1,300 | 1,220–1,280 | 1,125–1,185 |
Sustaining Capex ($/M) |
112.5–137.5 | 110.0–135.0 | 95.0–120.0 |
Major Capital ($M) |
260.0–290.0 | 250.0–280.0 | 220.0–260.0 |
Discovery ($M) |
75.0–100.0 | 70.0–100.0 | 70.0–100.0 |
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 Weekly Wrap: ASX hits new post-March high
- 5 things to watch on the ASX 200 on Monday
- Brokers name 3 ASX shares to buy right now
- Why Bapcor, Fortescue, Nufarm, & Saracen shares are pushing higher
Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Here’s why a big broker thinks you should avoid these ASX gold shares appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3p6xJI6
Leave a Reply