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Top 4 ASX gold stocks to watch in June

We examine the top four ASX-listed gold stocks in Macquarie Wealth Management’s coverage universe.

Top gold stocks Source: Bloomberg

Gold fails to gain traction

Gold, long seen as a hedge against uncertainty – has traded with relative stability in the last month – as volatility abates and optimism returns to global equity, commodity and bond markets. Even so, at the time of writing spot gold traded at US$1,704 per ounce, while the Comex gold June futures contract traded a shade ahead of that, at US$1,707 per ounce, up 0.15% or US$2.50.

Though gold may have found stability in recent months, Macquarie Wealth Management analysts this week said that in the face of this subdued environment, gold has ultimately struggled to gain traction, ‘oscillating below US$1,750/oz, but holding relatively firm in the face of a continued risk asset recovery.’

Looking forward, the investment bank’s analysts also noted that:

‘Further escalation of already heightened US-China tensions could catalyse a move higher but, so far, the steady rise in US inflation break-even yields has been the key support.’

Of the gold stocks in Macquarie’s coverage universe, the investment bank’s top picks – with associated price targets (PTs) – include: Saracen Minerals (PT: $5.00), Evolution Mining (PT: $5.60), Westgold Resources (PT: $2.90) and West African Resources (PT: 90 cents).

Macquarie has Outperform ratings on the above four gold stocks.

The Saracen Mineral share price: a strong quarter

As part of Saracen Mineral's (SAR) most recent quarterly update, the miner revealed record quarterly gold production figures of 158,132 ounces, achieved a record cash build of $106 million and reported an impressive set of quarterly earnings figures, with earning (NPAT) of between $65 million to $70 million.

Evolution Mining share price: a potential $125 million sale

Elsewhere and during the March Quarter, Evolution Mining (EVN) recorded gold production figures of 165,502 ounces, saw its free cash flow improve 33% on a quarter over quarter basis and had $528.9 million in total liquidity available: comprised of $168.9 million in cash and an undraw $360.0 million revolver.

Importantly, in its most recent market update, Evolution Mining said it was planning to sell its Cracow Gold Mine for as much as $125 million – made up of a $60 million cash consideration upon completion of the sale, $15 million in cash payable as of 30 June CY22, and $50 million in contingent considerations.

Westgold Resources share price: a significant raise now complete

In May, Westgold Resources (WGX) announced that it had successfully raised $45 million through a share placement – issuing 20 million shares at $2.25 per share – as a result. Speaking of this placement, the miner noted that:

'The proceeds will enable the acceleration of growth within the companies CMGP operations. These along with the Company’s transition to cash flow generation gives it ample cash to continue unlocking the value of its operations and growth within the region,’ the company said.

West African Resources share price: a 5-year ambition

Finally, as part of West African Resources (WAF) Annual General Meeting, held in May, the company noted that its ‘first stopping ore expected in September Quarter 2020’ and that its Sanbrado build and commissioning was completed ahead of schedule and under budget.

Looking forward and across its first full year of production, WAF expects to produce over 300,000 ounces of gold against an all-in sustaining cost (AISC) of US$500 per ounce; and then produce ~217,000 ounces of gold, as an annual average, over the first five years of full production, against an AISC of US$600 per ounce.

How to trade gold stocks

What do you think: is Macquarie right or wrong to be bullish on the above listed gold stocks? Trade accordingly. For example, you can trade a variety of gold and other commodity-centric equities – both LONG and SHORT – through IG’s world-class trading platform now.

To buy (long) or sell (short) Saracen with CFDs, follow these simple steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘Saracen Mineral' in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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