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7 Gold Stocks: Saracen, Dacian, Gold Road Resources, Evolution, Newcrest,Northern Star & Resolute

Aug 30, 2017 | Team Kalkine
7 Gold Stocks: Saracen, Dacian, Gold Road Resources, Evolution, Newcrest,Northern Star & Resolute

The recent macro-economic scenario with North Korea launching its missile got the gold stocks in limelight again, as the investors have been scurrying for the safe-haven assets and avoiding other riskier investments. While the concerns and fears on that side of the world now seem to be fading out, below is an analysis and view on 7 ASX gold stocks for making sound investment decisions: 


  

Saracen Mineral Holdings Ltd

Forecasting an improved AISC: Saracen Mineral Holdings Ltd (ASX: SAR) reported a decent result with EBITDA surging 54% year on year (yoy) to A$113.4 million in fiscal year of 2017 from A$73.5 million in prior corresponding year. NPAT enhanced 10% yoy to A$28.4 million while underlying NPAT surged 25% yoy to A$33.7 million. The group’s top line showed an outstanding performance with revenues rising 53% yoy to A$423.1 million driven by Gold production which rose 45% yoy to 272,807 ounces.

 

Project development and exploration pipeline (Source: Company reports)
 
The group achieved their production target of over 300,000oz/pa in the June quarter 2017. Saracen aims to achieve an all-in sustaining cost (AISC) of A$950/oz in FY20, which is worth noting. Their ongoing exploration enhanced their Reserves beyond 2.1Moz.We give a “Buy” recommendation on the stock at the current price of $ 1.38

 

SAR Daily Chart (Source: Thomson Reuters) 

Dacian Gold Ltd

High grade results at Mount Morgans: Dacian Gold Ltd (ASX: DCN) inked a Gas Transportation Agreement (GTA) with the APA Group which would develop a 4-km lateral from their Eastern Goldfields Pipeline to the site of the Mount Morgans Gold Project (MMGP) power station. The group also made a Power Purchase Agreement (PPA) with Zenith Energy for developing and operating a 17MW gas?fired power station. DCN stock rallied over 22.6% in the last three months (as of August 29, 2017) but slipped about 3% on August 30, 2017 owing to volatility while the group announced strong results from initial RC drilling at two shallow oxide prospects (Maxwells Oxide and Allanson Oxide) within MMGP. The results indicate for outstanding potential to grow the Mineral Resource at Mt Morgans and gold production is expected to commence in March 2018. We give a “Speculative Buy” on the stock at the current price of $ 2.29

 

DCN Daily Chart (Source: Thomson Reuters) 

Gold Road Resources Ltd

Targeting production in 2019 for Gruyere JV: Gold Road Resources Ltd.’s (ASX: GOR) main focus project, Gruyere JV is on track to reach a full production in 2019. The mine has a long 13-year mine life, with 270 koz pa at A$945/oz AISC. The group expects a strong potential for Greenfields exploration and is targeting an opportunity from over 6,000 km Yamarna Tenements. The group has confirmed high-grade mineralisation at Ibanez with bedrock drilling results from follow-up diamond drilling at the prospect within the Pacific Dunes-Corkwood Camp, returning 8.20 metres at 11.63 g/t Au from 229.67 metres, including 3.33 metres at 27.48g/t Au from 232.66 metres. GOR stock rallied over 37% in the last six months (as of August 29, 2017) while we rate a “Buy” on the stock at the current price of $ 0.71

 

GOR Daily Chart (Source: Thomson Reuters) 

Evolution Mining Ltd

Turnaround from loss to profit: Evolution Mining Ltd (ASX: EVN) reported a strong net profit after tax of A$217.6 million for fiscal year of 2017 as compared to net loss A$24.3 million in FY16.The sales revenue rose 11% yoy to A$1,479.9 million while EBITDA enhanced 17% yoy to A$713.9 million.
 

FY18 forecasts (Source: Company reports)
 
EVN controlled their average AISC to A$907 (US$684) per ounce and is expecting AISC to be in the range of A$850 – A$900 per ounce for FY18. This still indicates for a limited cost control potential for the group at the moment. Moreover, EVN stock is currently trading at a relatively higher price to earnings level. We believe that the stock is “Expensive” at the current price of $ 2.46

 

EVN Daily Chart (Source: Thomson Reuters) 

Newcrest Mining Ltd

Impact on performance at Cadia: Newcrest Mining Ltd (ASX: NCM) reported that their Cadia results were impacted by a seismic event which occurred in April 2017. But, mining has restarted in Panel Cave (PC2) and remediation work continues on Panel Cave 1 (PC1). Overall material mined from the project was impacted by 1% for nine months ended at March 31st, 2017 while Gold head grade lost 4%. For fiscal year of 2017, gold production reached 2.38 million ounces at a group All-In Sustaining Cost of $787 per ounce. The group declared a dividend of US 7.5 cents per share (70% franked). On the other hand, we see the stock trading at an unreasonable level and give an “Expensive” recommendation on the stock at the current price of $ 22.95

 

NCM Daily Chart (Source: Thomson Reuters) 

Northern Star Resources Ltd

MOU with Poseidon on Black Swan Operations:Northern Star Resources Ltd (ASX: NST) and Poseidon made an MOU to explore processing gold ore at Black Swan Operations. The group is aiming to develop the Black Swan as a central processing hub. Moreover, NST sees Black Swan processing plant to be a low capital cost entry while engineering is progressing for processing gold ores at Black Swan Operations. They are also making on-going discussions with third parties for toll treating gold ores. NST enhanced their production to 600,000ozpa for fiscal year of 2018, against their earlier forecasts of 525,000-575,000ozpa. On the other hand, NST is forecasting an AISC of A$1,000 – A$1,050/oz for FY 2018, which is not a great drop from AISC of A$1,013/Oz in FY17. NST stock generated over 40% returns in this year to date and is trading at higher levels. We rate the stock “Expensive” at the current price of $ 5.29

 

NST Daily Chart (Source: Thomson Reuters) 

Resolute Mining Ltd

Better than expected AISC decline:Resolute Mining Ltd (ASX: RSG) stock rallied over 7% on August 29, 2017 and is up 5% on August 30, 2017, boosted by rising gold prices driven by North Korea’s missile launch. RSG’s gross profit from operations soared up 14%.
 

Financial result (Source: Company reports)
 
The group was able to generate gold production of 329,834 ounces for FY17 at an AISC of A$1,132 per ounce (US$853 per ounce) which is much better than their original guidance of A$1,280 per ounce. Moreover, the group was able to get a better gold price of A$1,717 per ounce from total FY17 gold sales of 317,242 ounces. RSG stock is currently available at low levels and we rate the stock a “Speculative Buy” at the current price of $ 1.19

 

RSG Daily Chart (Source: Thomson Reuters)


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