Why the Resolute Mining (ASX:RSG) share price is shooting 5% higher

The Resolute Mining Limited (ASX:RSG) share price is racing higher on Thursday following the release of its quarterly update…

| More on:
gold share price represented by speeding golden bullet

Image source: Getty Images

The Resolute Mining Limited (ASX: RSG) share price has been a solid performer on Thursday.

In afternoon trade, the gold miner’s shares are up 5% to 49 cents.

However, despite this gain, the Resolute Mining share price is still trading a massive 67% lower than its 52-week high.

Why is the Resolute Mining share price rising today?

There have been a couple of catalysts for the rise in the Resolute Mining share price today.

The first is improving investor sentiment in the gold sector following the US Federal Reserve’s decision to keep rates on hold overnight.

It isn’t just Resolute Mining’s shares rising on the news, the rest of the gold miners are pushing higher as well today because of this.

This has led to the S&P/ASX All Ords Gold index rising 2.3% this afternoon.

What else is happening?

Also giving the Resolute Mining share price a boost was the release of its first quarter update, which wasn’t as bad as many had feared.

For the three months ended 31 March, Resolute Mining reported quarterly production of 85,668 ounces of gold. This was down 5% quarter on quarter due to the expected lower production from Mako, which was offset by the highest Syama sulphide gold production since 2016.

In addition to this, the company revealed that it achieved a realised gold price for the quarter of US$1,729 per ounce. This was up materially from the prior corresponding period and slightly quarter on quarter.

And while its All-In Sustaining Cost (AISC) rose 24% quarter on quarter to US$1,239 per ounce, this was in line with its FY 2021 guidance.

In light of this, management has reaffirmed its full year guidance for gold poured between 350,000 ounces to 375,000 ounces at an AISC of between US$1,200 and US$1,275 per ounce.

Is the Resolute share price good value?

One broker that sees a lot of value in the Resolute Mining share price is Goldman Sachs.

Although it has yet to respond to this update, the broker recently retained its buy rating and $1.00 price target on the company’s shares.

And with Resolute Mining performing in line with expectations so far in the first quarter, it seems unlikely that this recommendation will be changing in the coming days.

Based on its current share price, this price target implies potential upside of ~100% over the next 12 months.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers