5 Top ASX Gold Stocks To Buy In FY24

Published on 14 December 22

1. De Grey Mining Limited (ASX: DEG)

De Grey Mining Limited (ASX: DEG, “De Grey” or the “Company”) on 8 September 2022 announced its Preliminary Feasibility Study outcomes from Mallina Gold Project

(Chart source: TradingView) Weekly Candlestick Price Chart Pattern Production Profile and Maiden Reserve
  • Average total annual gold production of 540,000ozpa over the first 10 years
  • 550,000ozpa from years 1 to 5
  • The year 5 can have a Peak production of 637,000ozpa
  • Total production of 6.4Moz over a 13.6-year life of mine
  • Maiden Hemi JORC Probable Ore Reserve of 103Mt @ 1.5g/t Au for 5.1Moz
  • Increased production in the PFS is driven by increased Hemi Resources, JORC Resource confidence level and grade at all deposits, particularly Diucon and Eagle

Outlook:

De Grey Mining observed the PFS outcomes while announcing the results of the pre feasibility study into the Mallina Gold Project. The Company had been aiming for material improvements in annual gold production rate, grade, mine life, confidence levels and project economics from last year’s scoping study. Total production increased by nearly 50% from the scoping study to 6.4Moz with the annual gold production rate increasing by around 25% to 540,000ozpa over the first ten years.

Value Proposition:

DEG with a very minimal D/E of 1.27% vs 18.34% of the Industry and also much lower compared to its peers is very well placed in the Industry.

Technical Analysis:

Having moved above its short term EMAs (Exponential moving average), the stock is trading above its short term support also. With other indicators also favourably placed, it is likely to attempt to reach its next major resistance at $1.19.

Veye’s Take

De Grey Mining is encouraged about the prospect of increasing Resources and Reserves at Hemi and the Regional deposits with continued resource extension drilling. Extensive metallurgical test work demonstrated consistently high gold recoveries, averaging 93.6%. Despite the capital cost increase, the payback period of the project remains below two years with an excellent internal rate of return of approximately 50%, underlining the quality of the Project and its insensitivity to capital cost. Veye recommends a “Buy” on “De Grey Mining Limited” at the closing price of $1.215 (As of 15 December 2022).

2. Newcrest Mining Limited (ASX: NCM)

On 16 November 2022, Newcrest Mining Limited (Newcrest) (ASX: NCM) announced that the Brucejack mine had resumed mining and processing operations. On 11 November 2022, NCM provided the findings of the Cadia PC1-2 Feasibility Study. The first production from PC1-2 is expected in FY26, with execution targeted for FY29. The feasibility study estimated an IRR of 18% and NPV of A$1.8 billion (US$1.4 billion) over a 16-year mine life. Average All-In Sustaining Cost (AISC) of A$198/oz (US$148/oz) on a real basis. Total capital expenditure for the main works phase development of PC1-2 is estimated to be approximately A$1.4 billion (~US$1.1 billion) on a real basis, and approximately A$1.6 billion (~US$1.2 billion) on a nominal basis.

Outlook:

(Source: Company Reports) Construction and Production Schedule

The Cadia PC1-2 pre-feasibility study demonstrates solid financial returns and confirms the quality of this world-class asset. The first draw bell for PC2-3 was successfully fired In September 2022, with the first production expected during March 2023 quarter. The construction of the PC1-2 panel cave that will begin in FY23 is expected to sustain total Cadia mine production at approximately 35 million tonnes per annum as production from the current operational PC1 and PC2 caves begin to decline from FY24. The first production from this panel cave is expected in FY26. The PC1-2 cave is expected to take approximately 6-7 years to reach its maximum production capacity following the blasting of the first draw bell. With all approvals in place till 2031, NCM is progressing well with the execution of panel caves and will continue to be an outstanding gold and copper producer in future.

Technical Analysis:

(Chart source: TradingView) Weekly Candlestick Price Chart Pattern

The “Higher High” price formation on a weekly t/f with price pattern rejecting the downside and indicators holding upside signals upside potential in the stock.

Veye’s Take:

NCM with a market cap of $18.96B as of 8 December 2022 is progressing well with its drilling and resource expansion activities and returned several high-grade intercepts demonstrating significant growth potential across its key targets at Brucejack, Red Chris and Havieron. It has further expanded its global exploration portfolio during the quarter with the addition of five new emerging projects in the highly prospective Great Basin Region in North America. The Cadia PC1-2 feasibility study further confirmed the increased ore production across the project’s life. The company with its strong exploration and technical capabilities remains supported by a robust balance sheet and holds sufficient liquidity. The investments across its organic growth portfolio hold significant resource growth potential in the years ahead. With a Price to Earnings of 13.55x and a Price to Book value of 1.1x, the stock sits at an attractive value. Veye recommends a “Buy” on “Newcrest Mining Limited” at the closing price of $20.87 (As of 15 December 2022).

3. Northern Star Resources Limited (ASX: NST)

On 19 October 2022, Northern Star Resources Limited (ASX: NST) provided operational and financial results for the September 2022 quarter.

Gold sold totalled 369koz at an AISC of $1,788/oz (US$1,228/oz). Kalgoorlie reported production of 215,224oz gold sold at an AISC of $1,762/oz , Yandal reported 102,562oz gold sold at an AISC of $1,584/oz and Pogo with 51,170oz gold sold at an AISC of US$1,581/oz.

(Graphic Source: Company Reports) Group Gold Sales and AISC.

At September 30, cash and bullion totalled $473 million. Cash, bullion and investments totalled $662 million. For the year ended on 30 June 2022, NST performed in line with the guidance. Total gold sold during the year was reported at 1561koz at an AISC of $1633/oz well within the FY22 guidance of 1550-1650koz at an AISC of 1600-1640/oz.

For the full year ended on 30 June 2022, NST maintained a solid financial position with cash and bullion at 30 June 2022 of $628 million.

Revenue growth of 35% on FY21 to $3735million with underlying EBITDA growth of 31% on FY21 to $1517million. Group maintained an EBITDA margin of 41%. Cash earnings increased by 58% in FY21 to $1022million.

As on 30 June 2022, NST reported liquidity of $1.5 billion, at the upper end of its target range of $1.0-1.5 billion. Both its leverage ratio (ND/EBITDA) and gearing ratio (Debt/Debt +Equity) is less than zero, well within its target ranges.

Declared a fully franked final dividend of 11.5cps, corresponding to 23% of Cash Earnings. For FY22, the total fully franked dividend was 21.5cps, corresponding to 25% of Cash Earnings, and higher than the FY21 full-year dividend of 19cps.

Outlook:

Kalgoorlie’s performance was well in line with expectations, with all three mines in a positive free cash flow position at the end of the September quarter. During FY22, material movement across Kalgoorlie KCGM was reported at 66Mtpa, progressing well as per the targeting guidance of 80-100Mtoa by FY2026. The commissioning of the new expanded mill at Thunderbox continues and is on track to reach the nameplate capacity of an annualised 6Mtpa in 2H23. With the completion of mill expansion, Pogo is preparing for the mining ramp up activity. The Company is on track to deliver 1,560koz – 1,680koz gold at an AISC of $1,630-1,690/oz in FY23.

(Graphic Source: Company Reports)

NST with solid cash earnings is advancing well with the organic growth options across its portfolio and expects to deliver a profitable growth strategy to 2Mozpa by FY26.

Technical Analysis:

(Chart Source: Trading View) Technical Chart-Monthly Candlestick Price Chart

The stock price has retraced more than 23.6% of the fall from its high at $11.59 in April 2022. The closing above $9.02 could trigger it for upside momentum. The indicators positioning up, further support the bullish view on the stock.

Veye’s Take:

NST with a market cap of $9.82B as of 27 October 2022 is progressing well across its growth project pipeline. During FY22, NST divested its Kundana Assets, Paulsens Operation and Western Tanami Project resulting in a total pre-tax gain of $298 million. In addition, Northern Star acquired the Newmont Power Business for US$95 million, providing significant synergies and strategic value to the Kalgoorlie Operations. NST also announced the first share buy-back of up to $300 million representing management confidence in NST’s growth profile. Improved mill performance and grades from underground ore along with accelerated waste movements from various pre-strip areas contributed to the improved performance during the reporting period. NST progressing well across its multiple growth projects, well ahead of the planned schedule and remains on track to deliver a five-year profitable growth plan. Earnings are projected to grow by 47.2% compared to Industry earnings growth of 13.7% in the next twelve months, improving PE multiples and with Price to book multiple of 1.2x for the next twelve months compared to Industry and Sector Price to book multiple at 2.4x and 2.3x, NST is sitting at a good value. Veye recommends a “Buy” on” Northern Star Resources Limited” at the closing price of $10.86 (As of 15 December 2022).

4. MetalsTech Limited (ASX: MTC)

MetalsTech Limited (ASX: MTC) on 24 November 2022 announced its assay results completed from its Phase IV program at its 100% owned Sturec Gold mine. The drilling was designed to potentially extend the mineralisation to the south, particularly down dip/plunge.

Assay results from UGA-49 interpret showing a relatively continuous mineralised zone.

MetalsTech Limited on 31 October 2022 reported its exploration activities for the Quarter ended 30 September 2022. During the Quarter, the company continued its underground diamond drilling program at its 100% owned Sturec Gold mine.

Outlook:

With further planned drilling to test the Exploration Target area, where mineralisation remains open at depth and/or along strike, significant potential is there to increase the size of the Mineral Resource. The Exploration Target is entirely separate from the existing JORC (2012).

Value Proposition:

The company had $1.1 million of cash and $0.5 million net operating cash outflow providing adequate value to the business. 

Technical Analysis:

(Chart source: TradingView) Daily Candlestick Price Chart Pattern

Moving away ichimoku cloud and middle Bollinger band, the stock is continuing its bullish momentum. It is trading above its EMAs (Exponential moving average) on both daily as well as monthly charts. Protecting its strong short and long term support area at $0.40, it can have the potential of moving up further.

Veye’s Take

MetalsTech had reported results from three more diamond drill holes at its Sturec Gold mine. The first drillhole UGA-49, intersected higher than expected, deeper high gold grades on the lower margin of the current Mineral Resource which will potentially result in an increase in the gold grade in this zone. The results mainly came as high-grade pockets within a larger and broadly accumulated core samples. The company had also announced the results of its scoping study, of a very high quality, with 82% of the mining inventory based on Measured and Indicated Resources, on the Sturec Gold mine using a combined open-cut and underground mining method, which demonstrated that its project economics and technical viability were very encouraging. It also confirmed, in a base case scenario, of delivering gold and silver concentrate production of 1Moz. With estimate of robust operating margins, the results have also highlighted its potential to become a low cost gold concentrate producer. Veye recommends a “Buy” on “MetalsTech Limited” at the closing price of $0.445 (As of 15 December 2022).

5. Tietto Minerals Limited (ASX: TIE)

On 31 October 2022, Tietto Minerals Limited (ASX: TIE) released quarterly activities report for the period ending 30 September 2022.

As on 30 September 2022, TIE was debt-free with $87.65 million cash on the balance sheet. Net operating cash outflow during the quarter was $11.55 million. Tietto Minerals raised $64.3 million in capital through the proceeding for equity shares.

Value Proposition:

A price-to-book value of 4.3x provides a par value proposition to the company.

Technical Analysis:

(Chart source: TradingView) Weekly Candlestick Price Chart Pattern

The stock after facing strong resistance at $0.84 had been constantly retracing. It became so intense that it broke its 14 and 21 EMAs (Exponential moving average) on the daily chart. On the weekly chart, it made Bearish engulfing and moved below its daily support. Slowing momentum in MACD (Moving average convergence and divergence) and reversal of RSI (Relative strength index) indicate further bearishness.

Veye’s Take:

The company’s Abujar gold project is on schedule to produce its first gold pour in Q4CY2022 (late December 2022). The necessary pre-mining tasks, such as site construction, and electrical & mechanical installations, are all going according to plan. Abujar is anticipated to produce 260,000 ounces of gold in 2023. The company’s fundamentals remain sound, but the valuations are sliding as a result of the issuance of new equity shares in an effort to raise funds to support ongoing projects. On the technical chart, the company is indicating correction which could turn out to be steep at the current pricing point. “Buy” was given to “Tietto Minerals Limited” at the price of $0.49 and $0.545 on 27 January 2022 and 6 October 2022 respectively. The stock gave excellent returns of more than 56% and 40% respectively. Veye recommends “Buy” on “Tietto Minerals Limited” at the closing price of $0.74 (As of 15 December 2022).

 Disclaimer

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