As the gold boom continues, Australia is set to overtake China as the world’s top gold-producing nation, according to a report by Resources Monitor. Additionally, a separate report by Fitch Solutions, as reported by Australian Mining, predicted an increase in national gold output to 13.3 million ounces by 2029. 

Australian gold miners are cost-effective producers. Evolution Mining Ltd (ASX: EVN) touted the potential reduction of the all-in sustaining cost (AISC) when acquiring Red Lake.  

Projects driving growth

The Fitch Solutions report ranked Australia second after Canada in terms of growth projects and developments. 

For several reasons, Cadia mine is the jewel in the crown for Newcrest Mining Limited (ASX: NCM). For instance, it was the largest gold producer of 2019 with a full-year production of 871,246 ounces. The company is planning to push its plant to 33 million tonnes total throughput per year. And then to 35 million tonnes.

The company has an AISC of US$827 and a recently announced gold streaming acquisition will help keep AISC low. I believe Newcrest will be one of the great historic gold companies within the decade. Newcrest is trading at a price-to-earnings (P/E) ratio of 26.61.

Saracen Mineral Holdings Limited (ASX: SAR) is upgrading its Carouse Dam from 2.4Mtpa of mill throughout to 3.2Mtpa. In addition, Saracen has shown it is a well-managed company. It is consistently one of the largest-traded gold shares on the ASX by volume. Saracen has an AISC of $1,133 and it is trading at a P/E ratio of 36.77 at the time of writing.

Regis Resources Limited (ASX: RRL) is bringing on the McPhillamys project. The company claims this is Australia’s largest remaining orebody via open pit technology. Regis has an AISC of $1,174 and it is currently trading at a P/E of 14.69.

Further gold boom prospects

Current planned expansions are not the only Australian gold boom prospects. The gold industry also has a number of high prospect exploration projects and feasibility studies underway.

This includes the Havieron Pilbara exploration by Newcrest, the Yamarna Terrane of the eastern Yilgarn by Gold Road Resources (ASX: GOR), the Red 5 Limited (ASX: RED) King of the Hills gold deposit, and the high-grade 2.2 million ounce deposit by Bellevue Gold Ltd (ASX: BGL).

Foolish takeaway

The gold miners of Australia have worked hard to earn a reputation as efficient producers. The gold price in Australian dollars remains at all-time high levels and it appears likely to stay that way for the medium term. I do not think the COVID-19 pandemic, economic uncertainty and global trade issues are likely to subside soon.

More reading

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Motley Fool contributor Daryl Mather 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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The Graincorp Ltd (ASX: GNC) share price is rallying for the second day and is topping the charts!

Shares in the grain handler jumped 8.5% to $3.98 in morning trade. This makes it the best performer on the S&P/ASX 200 Index (Index:^AXJO) with gold miner Silver Lake Resources Limited. (ASX: SLR) a distant second.

Graincorp’s gains comes on top of yesterday’s near 12% run after it posted a better than expected first half profit result.

The brightening outlook for agribusinesses is also giving Elders Ltd (ASX: ELD) a lift with the stock jumping 5% to $9.52 at the time of writing. Elders is expected to report its earnings on Monday.

The question facing investors is whether it’s too late to buy Graincorp shares.

Bumper growth

The good news is there is quite a bit of space for the stock to climb before hitting fair value, according to the analysts at Macquarie Group Ltd (ASX: MQG).

Graincorp’s interim net profit from continuing operations of $27 million is well ahead of Macquarie’s estimates of $18 million.

What’s more, all the group’s divisions, including its processing business, were performing better than the broker expected.

Firing on all cylinders

“Processing reported EBITDA of $23m, stronger than our $11m forecast,” said Macquarie.

“Oilseed crush margins have recovered strongly due to increased ECA canola supply and stronger oil and meal demand/pricing.”

The good times may continue to roll on into the second half, thanks in no small part to the recent wet weather along the east coast.

Trade war misses mark

Even the diplomatic spat between China and Australia doesn’t faze Macquarie. China threatened to buy fewer Australian exports in retaliation to Prime Minister Scott Morrison’s call for an independent investigation on the origins of COVID-19.

Tensions escalated when China formally threatened to slap a 80% tariff on Australian barley and suspended the import licenses of four of our abattoirs.

But Graincorp may not be as impacted by the potential barley tariff as some investors might have thought.

This is because 88% of Aussie barley exports come from Western Australia and Graincorp is an east coast centric business, explained Macquarie.

Clearer skies ahead

“GNC is planning for higher grain exports in 2H20 (exports generally higher margin vs domestic),” said the broker.

“Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola oil and meal values.

“Favourable soil moisture levels across large parts of eastern Australia have supported widespread planting for the FY21 crop.”

What’s more, Graincorp is tipped to restart paying dividends in FY21 after a three-year break.

Macquarie is urging investors to buy the stock and its price target is set at $4.79 a share. This leaves Graincorp with a 23% potential upside over the next 12 months, if forecast dividends are included.

More reading

• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. 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.

The post Why the best performing ASX stock might have more room to run higher appeared first on Motley Fool Australia.

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At lunch the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is pushing higher. The benchmark index is currently up 0.8% to 5,370.2 points.

Here’s what has been happening on the market today:

Bank shares push higher.

Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks are pushing higher on Friday. This follows a strong night of trade on Wall Street for U.S. banks. The best performer in the group today has been the Westpac Banking Corp (ASX: WBC) share price with a 1.1% gain.

Tech shares dropping lower.

The tech sector is having another off day on Friday. At lunch the S&P/ASX 200 Information Technology index is down 1.7% and acting as a drag on proceedings. Payments company Afterpay Ltd (ASX: APT) and cloud-based accounting software provider Xero Limited (ASX: XRO) are amongst the worst performers with 1% and 5% declines, respectively.

Gold miners charge higher.

One area of the market performing particularly strongly today has been the gold mining industry. At lunch the S&P/ASX All Ordinaries Gold index is up a solid 3.2% after the gold price hit a three-week high overnight. Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) shares have been positive performers with gains of 4% each.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today has been the Graincorp Ltd (ASX: GNC) share price again with an 8% gain. This morning analysts at Macquarie retained their outperform rating and lifted the price target on its shares to $4.79. The worst performer has been Graincorp’s spun off malt business, United Malt Group Ltd (ASX: UMG). Its shares are down 7% after completing a $140 million institutional placement. The new shares were issued at $3.80 per share, representing an 11.4% discount to its last traded price.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. 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.

More reading

• Where growth, income, and value investors can invest $5,000 today
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• Forget CBA and buy these top ASX dividend shares

The post ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower appeared first on Motley Fool Australia.

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