By – Kaivalya Kandarpa
The Australian share market has staged an impressive recovery in April, but if we are looking at the entire 2016, the market has been somewhat volatile and most blue-chips have declined in value or are little changed at best. However, gold bullion prices have risen more than 15% in US Dollar terms (USD) and around 10% when translated into Australian Dollars (AUD). The price increase creates a favourable environment for local gold miners or explorers, which has sent gold stocks surging over the past few months. However, not every company will automatically do well. Companies with a strong balance sheet, operational efficiencies, attractive assets or low cost production will likely be able to benefit from rising prices. Find below a list of five ASX gold miners that show some of these characteristics. Please do not consider the content of this article as financial advice. Talk to your financial adviser or planner before taking any action.
- Medusa Mining Limited (ASX: MML): Medusa Mining is an Australian based resources company, predominantly focused on gold mining projects in the Philippines. Medusa’s flagship project is the 100% owned Co-O Mine located in the Philippines. Total Ore Reserves of the Co-O Mine are estimated at 1.8million tonnes at a grading of 7.3 g/t which equates to 427,000 ounces of gold. The company has been able to remain profitable despite a four-year contraction in gold prices. The recent strength in gold prices creates a more favourable environment for Medusa, which is set to benefit from any cyclical recovery in the gold price. MML is up 122% since the beginning of 2016.
- OZ Minerals Limited (ASX: OZL): OZ Minerals offers profitable exposure to the gold and copper mining industry. The company has been generating free operating cash flow which has steadily risen since 2013. OZ Minerals owns and operates the Prominent Hill copper-gold mine and the Carrapateena exploration project in South Australia. The miner recently announced that the Prominent Hill delivered strong results during the March quarter, with 14% growth in total ore extracted. The Carrapateena Project is progressing towards completion of to the Pre-Feasibility Study (PFS), which is expected to be announced along with the final scope of project scale in May. The company’s has balance increased by $315 million to $533 million during the quarter, and the balance sheet remains debt free.
- Resolute Mining Limited (ASX: RSG): Resolute Mining is an Australian gold mining company with operations in Queensland and Africa. The Syama mine in Mali, which was commissioned in 2009, is currently undergoing ‘improvement and cost reduction’ programs and the company is set to include any opportunities identified during this process into its expanded Definitive Feasibility Study (DFS). The company has maintained its production guidance at 315,000 ounces for FY16. Resolute also lowered its cost guidance for the fiscal year as it now expects to incur All in Sustaining Costs (AISC) of A$1,220 per ounce, from the previous guidance of $1,280 per ounce. RSG is up 234% year to date.
- Gold Road Resources (ASX: GOR): Gold Road Resources is an Australian resources company focused on gold exploration in Western Australia. The company recently announced that its Gruyere Project near Laverton, now hosts 10% higher mineral resource of 147.7 million tonnes at 1.3 grams per tonne grading for a total of 6.16 million ounces of gold. During the March quarter, the company announced that the Pre-Feasibility Study for Gruyere confirmed a technically sound and a financially viable project. GOR has risen 20% year-to-date.
- Teranga Gold Corporation (ASX:TGZ): Teranga is a Canadian gold miner focused on gold mining activities in Africa. The company’s primary asset is the Sadiola Gold Mine in Senegal, which was commissioned in 2009. The company achieved record high mill throughput production of 70,727 ounces of gold in the quarter ended 31st March 2016. The company has lowered its overall costs and is well positioned to improve its earnings on the back of recent strength in gold prices.
Please note that no guarantee can be made for the accuracy of prices, which are as at 26 April 2016.
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