Resolute Mining Limited (ASX: RSG) shares surged 5.0% higher in yesterday’s trade and now boast a market capitalisation over $1 billion.
Shares in the Aussie gold miner jumped higher thanks to further uncertainty in global and domestic share markets. But despite the strong gains in recent days, is the ASX gold share a strong buy right now?
What does the Aussie miner do?
Resolute is a leading ASX-listed gold miner with operations across Africa. The group generates strong production numbers from its assets in Mali, Senegal and Ghana.
However, unlike many of its listed rivals, the Resolute Mining share price has been under pressure in 2020. In fact, the ASX gold share has slumped 23.0% lower this year to underperform the S&P/ASX 200 Index (ASX: XJO).
Why Resolute Mining shares could be in the buy zone
Yesterday’s strong gains came on the back of an update on its Syama mine and updated guidance.
Resolute said negotiations with the Mali labour union representing its workers have resulted in the cancellation of further planned strike action.
That’s good news for Resolute’s operational certainty and potential production levels. The Aussie gold miner upgraded guidance based on the higher degree of certainty and resolved industrial relations dispute.
Resolute is now forecasting total 2020 production between 400,00 and 430,000 ounces of gold at an all-in sustaining cost (AISC) of US$980 to US$1,080 per ounce.
That saw the Resolute Mining share price shoot higher but it still remains down for the year.
With soaring gold prices and strong production levels on the horizon, I think the ASX gold share could be worth a look at its current valuation.
Of course, there is still some operational risk involved and I’d argue that another miner like Saracen Mineral Holdings Limited (ASX: SAR) is a safer bet.
However, Resolute could offer potential capital gains on top of its 1.5% dividend yield.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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