Goldfields miners get big tick
Resources analysts are taking an upbeat outlook on the fortunes Goldfields-focused miners in the wake of a rally in gold prices.
In a note to clients this week RBC Capital Markets resources analyst Paul Hissey said a range of Australian gold miners stood to benefit from sentiment prices could rise further, with Australian gold equities rallying from 15 to 20 per cent in recent weeks.
Mr Hissey said trade tensions, political uncertainty and falling stock markets contributed to a recent rise in the US dollar gold prices, with a weak Aussie dollar already giving local producers an advantage.
He noted Kalgoorlie-focused Northern Star Resources and Saracen Mineral Holdings were among the most likely of the larger gold miners to improve in the coming months on the back of “encouraging” exploration results.
Meanwhile, Mr Hissey said smaller gold companies like Mt Morgans owner Dacian, Gruyere gold mine developer Gold Road Resources and Ramelius Resources would also stand to benefit because higher prices would allow them to avoid cash flow concerns and invest in exploration and growth.
Overall, Mr Hissey said Australian gold stocks were fully valued but in a good position to improve if prices remain high.
“To those who decry that ‘gold is not doing its job anymore’ we would argue that it is doing exactly what it’s supposed to do,” he said.
“Even more importantly, the healthy state of the Australian producers provides (in our view) a comfortable place to invest as the stocks in this market typically do not require a higher price to make the business better.
“The recent rally merely provides additional margin to already very healthy businesses.”