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6 ASX shares driving the Australian gold boom

Gold nugget on map of Australia
Image source: Getty Images

As the gold boom continues, Australia is set to overtake China as the world’s top gold-producing nation, according to a report by Resources Monitor. Additionally, a separate report by Fitch Solutions, as reported by Australian Mining, predicted an increase in national gold output to 13.3 million ounces by 2029. 

Australian gold miners are cost-effective producers. Evolution Mining Ltd (ASX: EVN) touted the potential reduction of the all-in sustaining cost (AISC) when acquiring Red Lake.  

Projects driving growth

The Fitch Solutions report ranked Australia second after Canada in terms of growth projects and developments. 

For several reasons, Cadia mine is the jewel in the crown for Newcrest Mining Limited (ASX: NCM). For instance, it was the largest gold producer of 2019 with a full-year production of 871,246 ounces. The company is planning to push its plant to 33 million tonnes total throughput per year. And then to 35 million tonnes.

The company has an AISC of US$827 and a recently announced gold streaming acquisition will help keep AISC low. I believe Newcrest will be one of the great historic gold companies within the decade. Newcrest is trading at a price-to-earnings (P/E) ratio of 26.61.

Saracen Mineral Holdings Limited (ASX: SAR) is upgrading its Carouse Dam from 2.4Mtpa of mill throughout to 3.2Mtpa. In addition, Saracen has shown it is a well-managed company. It is consistently one of the largest-traded gold shares on the ASX by volume. Saracen has an AISC of $1,133 and it is trading at a P/E ratio of 36.77 at the time of writing.

Regis Resources Limited (ASX: RRL) is bringing on the McPhillamys project. The company claims this is Australia’s largest remaining orebody via open pit technology. Regis has an AISC of $1,174 and it is currently trading at a P/E of 14.69.

Further gold boom prospects

Current planned expansions are not the only Australian gold boom prospects. The gold industry also has a number of high prospect exploration projects and feasibility studies underway.

This includes the Havieron Pilbara exploration by Newcrest, the Yamarna Terrane of the eastern Yilgarn by Gold Road Resources (ASX: GOR), the Red 5 Limited (ASX: RED) King of the Hills gold deposit, and the high-grade 2.2 million ounce deposit by Bellevue Gold Ltd (ASX: BGL).

Foolish takeaway

The gold miners of Australia have worked hard to earn a reputation as efficient producers. The gold price in Australian dollars remains at all-time high levels and it appears likely to stay that way for the medium term. I do not think the COVID-19 pandemic, economic uncertainty and global trade issues are likely to subside soon.

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Motley Fool contributor Daryl Mather has no position in any of the 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 Scott Phillips.

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Daryl Mather