Which Gold stocks to buy at this time of improving sentiment?

Newcrest Mining Ltd

NCM Details
 
Increasing gold production while controlling costs and capital expenditure: Newcrest Mining Ltd (ASX: NCM) recently released its half year results for the year 2015-2016 with statutory profit of $81 million and an underlying profit of $63 million underpinned by production of 1.204 million ounces of gold (an increase of 6% from same period a year ago). NCM all-in sustaining cost reduced by 5% to USD$770 per ounce. Looking ahead, the group's total gold production for FY16 is estimated between 2.4 to 2.6 million ounces while copper and silver production is seen between 80-90 thousand tonnes and 2.0 to 2.4 million ounces, respectively.
 


Underlying profit movement (Source: Company reports)
 
Total capital expenditure for the year is forecasted to be in between $480 to $575 million. On a side note, the company has been able to rescue the worker trapped underground in an Indonesia gold mine for eight days. From market standpoint, the stock has been of interest now given the improving gold sentiment, however, operational performance of Lihir is still under watch. The stock has surged 18.97% in the last one month (as at February 16, 2016) Based on the above stated factors, we rate the stock “HOLD” at the current share price of  $15.37
 
 
NCM Daily Chart (Source: Thomson Reuters)
 

Perseus Mining Ltd

 

PRU Details
 
Financial updates and strong guidance: Perseus Mining Ltd (ASX: PRU) recorded a profit after tax of $12 million or 2.3 cents per share for the half year to December 31, 2015 less by $ 29.2 million from the year ago period mainly due to decrease in foreign exchange gain on the translation of inter-company loans and a $ 4.8 million exploration impairment charge.
 

 Production guidance (Source: Company reports)
 
Revenue during the first half was up 5% while cash balance surged 119%. At an operational level, Perseus’s Edikan Gold Mine in Ghana recorded material cost reductions during the first half including 48% drop in mining costs per tonne, 15% and 21% decline in processing unit costs and G&A costs, respectively. We believe that the stock is trading at cheap valuations with ability to perform well while emphasizing on cost reductions, and maintain a “SPECULATIVE BUY” at the current share price of  $0.335
 
 
PRU Daily Chart (Source: Thomson Reuters)
 

Beadell Resources Ltd

BDR Details
 
Strong mining results: Beadell Resources Ltd (ASX: BDR) announced that its 100% owned Tucano gold mine is expected to produce 145,000 to 160,000 ounces of gold in calendar year 2016 indicating an increase of 19% to 31% from previous year. All-in sustaining costs are forecast to be in the range $715 to $815 per ounce, a decrease of 19% to 29% over previous year. Non-sustaining capital expenditure is forecast to be in the range of $4.5 million to $5.5 million.

 

Operations data (Source: Company reports)
 
Meanwhile, mining of gold for the recently reported December quarter stood at 1.5 million tonnes indicating an increase of 69% and 10% over the September 2015 and December 2014 quarter, respectively. We put a “SPECULATIVE BUY” for this dividend stock at the current share price of  $0.235
 
 
BDR Daily Chart (Source: Thomson Reuters)
 

Medusa Mining Ltd

MML Details
 
Declining production and weak guidance: Medusa Mining Ltd (ASX: MML) recorded Co-O mine production of 29,674 ounces at a head grade 6.79 g/t gold  for its December 2015 quarter compared to 31,495 ounces in September quarter. Cash costs stood at $435 per ounce compared to $439 per ounce in the previous quarter. At the end of the quarter, MML had total cash and cash equivalent in gold on metal account of around $16.0 million compared to $11.6 million as of September 30, 2015. Looking ahead, the Co-O Mine production guidance for 2015-16 financial year remains at 120,000 to 130,000 ounces, subject to a review of operations currently underway. The all-in sustaining costs (ASIC) guidance stands at $900 to $1,000 per ounce and will remain at an elevated level until such time as all mine medium term waste infrastructure projects are completed and the cost efficiencies they produce materialise.Although the stock surged 50.7% (as of February 16,2016) in the last four weeks, we believe the stock is "Expensive" at the current share price of  $0.59
 
 
MML Daily Chart (Source: Thomson Reuters)
 

Evolution Mining Ltd

EVN Dividend Details
 
Bright outlook and strong financials: Evolution Mining Ltd (ASX: EVN) recorded quarterly group gold production of 203,700 ounces, sequential increase of 17% over prior quarter, with group all in sustaining costs (AISC) of $1,016 per ounce. Record quarterly production from Mt Carlton of 30,026 ounces compared to 24,213 ounces in the prior quarter. Cash flow from operations continued to be strong at $ 97.8 million. EVN upgraded its financial year 2016 guidance with production now estimated to be between 770,000 and 820,000 ounces, an increase from 730,000 to 810,000 ounces prior guidance. Estimated C1 cash costs are now seen between $ 700 to $ 740 ounces compared to the earlier value of $ 715 – $ 795 per ounce. AISC of $ 970 – $ 1,020 per ounce decreased from $ 990 – A$ 1,060 per ounce. However, the stock price of EVN has risen 30.96% (as of February 16, 2016) in the past one month and we don’t expect a great upside. We believe that at such high levels, the stock is "Expensive".
 
 
EVN Daily Chart (Source: Thomson Reuters)
 

St Barbara Ltd

SBM Details
 
Strong production growth: For the first half financial year 2016, St Barbara Ltd.’s (ASX: SBM) gold production stood at 202,951 ounces exceeding its target. Consolidated gold production for the December quarter stood at 91,912 ounces with consolidated all-in sustaining costs of $ 992 per ounce. Led by the above-target production in the first half of the year, financial year 2016 guidance was revised upward. Gwalia (Leonora) gold production was estimated between 245,000 and 260,000 ounces compared to 230,000 to 250,000 ounces of previous estimate. Simberi gold production estimates increased to 100,000 to 110,000 ounces from 90,000 to 110,000 ounces forecasted earlier. However, exploration expenditure was forecasted at $ 15 million compared to previous estimate of $ 10 million. The company also entered into a zero cost collar hedging facility to deal with the USD gold price risk linked with early payment of US$36 million balance on the Red Kite debt facility.

 

Production guidance (Source: Company reports)
 
The stock is currently trading very close to its 52-week high price which is driven by the significant 31.94% (as of February 16, 2016) increase that it recorded in the past three months. Based on above factors, we rate the stock as "Expensive" at the current share price of $1.785
 
 
SBM Daily Chart (Source: Thomson Reuters)

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