Why a rising gold price could send all these gold miners higher

Australian gold miners are enjoying huge profits, but is St Barbara Ltd (ASX:SBM) the best to invest in?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

People invest in gold for a number of reasons including as a safe haven asset in times of uncertainty and as a hedge for inflation.

Although I have never personally been interested in investing in the precious metal, I can understand why some investors choose to do so.

As a result, I thought it would be interesting to see how the most popular ASX gold miners compare to one another.

Since gold miners have no control over the price they receive for their gold, I have decided to compare them based on the one variable they can influence – operating costs.

Here is what I have found:

Company Market Cap Most recent AISC* (US$) Forecast Annual Production Guidance 10-Year Avg Shareholder Return
Newcrest Mining Limited (ASX: NCM)
$18.4 billion $770/ounce 2,475,000 ounces 1.7%
Evolution Mining Ltd (ASX: EVN)
$4.2 billion $637/ounce 830,000 ounces 11.0%
Northern Star Resources Ltd (ASX: NST)
$2.9 billion $770/ounce 500,000 ounces 50.4%
OceanaGold Corporation (ASX: OGC)
$2.7 billion $708/ounce 405,000 ounces 18.2%
Regis Resources Limited (ASX: RRL)
$1.7 billion $713/ounce 315,000 ounces 14.6%
St Barbara Ltd (ASX: SBM)
$1.4 billion $646/ounce 370,000 ounces -1.4%
Resolute Mining Limited (ASX: RSG)
$850 million $827/ounce 325,000 ounces -0.4%
Saracen Mineral Holdings Limited (ASX: SAR)
$830 million $1132/ ounce 300,000 ounces 9.6%

Source: CommSec

*AISC = All-in Sustaining Costs

With the current spot gold price trading around US$1,280/ounce, it is pretty clear that most of the major ASX gold producers are enjoying extremely strong operating margins right now.

However, Evolution Mining and St Barbara appear to be the two best placed gold miners to withstand a potential downturn in gold prices as they currently enjoy the largest operating margins.

On the flipside, Saracen Minerals and Resolute Mining can be expected to be the biggest winners if the gold price tracks higher from here as they will enjoy the biggest percentage margin gains from the miners listed above.

Foolish takeaway

It is nearly impossible to predict where the gold price is going to next, but investors who want to invest in the sector should consider the lowest cost producers as their first option. These miners will have the ability to withstand prolonged periods of low prices and will also have the financial strength to pick up distressed assets at bargain prices.

Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »