The gold spot price has pushed higher to almost US$1,900 after dipping as low as US$1756 in November.
Despite gold holding never before seen levels, and US Federal Reserve continuing to expand its balance sheet, Citi believes that gold prices will peak in 2021 and weaken through 2022.
Here are the ASX gold shares that have had share price targets adjusted to reflect lower gold prices.
Newcrest Mining Ltd (ASX: NCM)
The Newcrest Mining share price target was lowered from $35.50 to $32.00 with a buy rating. Its shares are currently trading at $26.74, so the price target still represents an upside of 19%.
Newcrest is Australia's largest gold producer with one of the lowest all-in sustaining costs (AISC) in the world of just US$980 per ounce.
The company continues to explore a number of organic growth opportunities to leverage its low costs and current gold prices. This includes a secondary listing on the Toronto Stock exchange to support its growth strategy in the Americas and broaden its access to the large North American capital pool.
Saracen Mineral Holdings Limited (ASX: SAR) and Northern Star Resources Ltd (ASX: NST)
Saracen and Northern Star are currently working through a proposed merger under which Northern Star will acquire all shares of Saracen. This merger is forecast to be completed by 15 February 2021.
Saracen was upgraded from neutral to buy, but its share price target was lowered from $6.20 to $5.30 to reflect lower gold prices. The lower price target still represents a 13% upside to its price of $4.68 at the time of writing.
Northern Star was also upgraded from neutral to buy, with its price target lowered from $15.90 to $13.90. At its current price of $12.40, this represents an 12% upside.
Evolution Mining Ltd (ASX: EVN)
The Evolution Mining share price target was lowered from $5.50 to $4.90 with a neutral rating. This represents a downside of 2.4% to its current price of $5.02.
Evolution is often regarded as one of the lowest cost gold producers in the world with its September quarter AISC of A$1,198 per ounce (US$857/oz).
While the company's growth might not be as explosive as Northern Star or Saracen, it has flagged that its Cowal and Red Lake projects will drive significant organic growth over the next three years.
Evolution delivered total gold production of 746,463 ounces in FY20 and looking ahead, expects to deliver:
3-year outlook |
FY21 |
FY22 |
FY23 |
Production (oz) |
670,000–730,000 | 700,000–770,000 | 790,000–850,000 |
AISC ($/oz)2 |
1,240–1,300 | 1,220–1,280 | 1,125–1,185 |
Sustaining Capex ($/M) |
112.5–137.5 | 110.0–135.0 | 95.0–120.0 |
Major Capital ($M) |
260.0–290.0 | 250.0–280.0 | 220.0–260.0 |
Discovery ($M) |
75.0–100.0 | 70.0–100.0 | 70.0–100.0 |
