Gold has always been a cornerstone of the Australian economy and 2019 was no exception. In fact, according to Surbiton Associates director, Dr Sandra Close, it was our greatest year of gold production ever.
This is largely attributed to increased gold production and new projects coming online including Newcrest Mining Limited (ASX: NCM)'s East Cadia deposit and a range of others.
This has been made due to the twin forces of a rapidly rising gold price and a falling Australian Dollar (AUD) against the US Dollar (USD). On March 1, 2020, the gold price was the highest it has ever been in AUD.
People have always seen gold as an antidote to chaos. It normally takes until things really take a turn for the worse before investors rush to gold in their masses. It hit a high in 2009 with the GFC and again in 2001 with the Dot Com crash.
I personally prefer gold companies to gold bars. Gold bars don't pay dividends, and shares in gold companies tend to rise a lot more due to the nature of the share market.
I believe these three ASX-listed gold companies are the best placed to take advantage of continuing high gold prices and low AUD.
Newcrest Mining Limited (ASX: NCM)
Newcrest jealously guards its position as the world's third-largest gold producer. It has been aggressively pursuing partnerships and joint ventures with small-cap companies to access replacement tonnes without paying the premium of a takeover.
These include the recent announcement of a farm-in agreement with a small-cap in Pilbara's Paterson region where it will fund exploration to earn 51% within 5 years of commencement and 75% within 8 years. Other examples are the integration and continued increase in safe gold production at Red Chris and a range of other exploration joint ventures.
Newcrest is sitting on a price to earnings ratio of 24 and is one of the more expensive within the ASX gold sector. The Newcrest share price dropped 8.4% during last week's sell-off and fought back 3% on Monday.
Regis Resources Limited (ASX: RRL)
Regis has been underplayed for a long time and currently is sitting at a P/E ratio of 10.8. It was the subject of a broker downgrade in January due to government approvals processes beyond the company's control.
What everyone seems to be missing is that the company's McPhillamys project is one of the largest oncoming mine sites in Australia with a planned production rate of 150,000 and 200,000 ounces of gold production a year. It will have a mine life of approximately 10 years.
Regis has delivered an earnings per share (EPS) compound annual growth rate (CAGR) of 16% over the past 9 years. Last week, the Regis share price fell 10.8% and lost an additional 6.9% on Monday.
Northern Star Resources Ltd (ASX: NST)
Northern will see the growth of production during FY20 with increased gold production from the Pogo mine in Alaska which it is busily integrating into its operations. It has also yet to fully start to squeeze production from the newly acquired Kalgoorlie Consolidated Gold Mines. Northern has a long-standing capability to increase gold production and uncover more reserves in its acquisitions.
The Northern Star share price lost 7% last week and dropped an additional 2.23% on Monday. Northern has an EPS CAGR of 21.6%.
