ASX gold mining shares have been hit by a double whammy recently of weaker gold prices and a rising Australian dollar. As a result, ASX gold shares across the board, such as Evolution Mining Ltd (ASX: EVN), have fallen by at least ~30% since setting record all-time highs in mid-2020.
While the gold price might not be going anywhere anytime soon, brokers have called out the following two ASX gold shares for their potential to deliver further growth through exploration and operational upside.
1. Gold Road Resources Ltd (ASX: GOR)
The Gold Road share price pushed as much as ~10% higher on Wednesday after the company announced its 2020 full-year results. Gold Road delivered a significant uplift in earnings with earnings before interest, taxes, depreciation and amortisation (EBITDA) of $170.6 million, compared to the $9.8 million EBITDA loss in 2019. This resulted in a net profit after tax (NPAT) of $80.8 million compared to the $4.7 million loss in 2019.
Gold Road's financial performance was ahead of Macquarie Group Ltd (ASX: MQG) estimates. The broker rated Gold Road as an outperform with a $1.50 price target on 11 March. This represents an almost 30% premium to the Gold Road share price as at Friday's close.
Looking ahead, the broker pointed to the company's tier-one gold mine, Gruyere, to drive outperformance in the medium term.
Macquarie acknowledged the recent weakness in the gold price and pressure from the Australian dollar. But it also described Gold Road as a 'high margin producer' that should perform well versus ASX gold shares.
2. Newcrest Mining Ltd (ASX: NCM)
Newcrest is the largest ASX gold share and one of the lowest-cost gold producers in the world. Despite the company's size, it is progressing a number of growth options, more notably at its Havieron and Red Chris Projects.
Morgan Stanley has an overweight rating for Newcrest shares with a $32.10 price target as at 12 March. The Newcrest share price closed today's session at $24.02.
The broker sees the potential for exploration expansion after a new zone of high-grade mineralisation was discovered at Red Chris. It was also pleased with the advancements made at the Havieron project including board funding approval and early works construction being underway.
