S&P/ASX 200 Index (ASX: XJO) mining stocks digging up gold are in our spotlight today.
This comes as the gold price hovers near nine-month highs.
The yellow metal is currently trading for US$1,915 (AU$2,709) per troy ounce after hitting fresh nine-month highs of US$1,950 on Wednesday.
And bullion could well march higher from here, supported by its historic safe haven status as the world faces plenty of uncertainty in the year ahead.
Any further price rises would certainly be good news to ASX 200 mining stocks in the gold space.
You may have heard analysts say that gold miners are leveraged to the price of gold. That's because the miners' all-in-sustaining costs (AISC) are essentially fixed, regardless of the price they receive for the precious metal.
So, when the gold price marches higher, most all of those gains go straight to the bottom line.
With that said, we look at three ASX 200 mining stocks producing gold that could soar amid a rising gold price.
ASX 200 mining stock number one
Up first, we have Newcrest Mining Ltd (ASX: NCM).
The ASX 200 mining stock has a market cap of $20.7 billion and pays a trailing dividend yield of 1.8%, fully franked.
The Newcrest Mining share price is up 9.6% in 2023, currently trading at $22.63 per share.
In the December quarter, Newcrest produced 512,000 ounces of gold at an AISC of $1,082 per ounce. That compares to the current gold price of AU$2,709.
Newcrest was recently upgraded by Morgans to an add rating with a $25.70 price target. That's 13.8% above the current price.
According to the analysts at Morgans:
We see a dependable production and earnings base from which NCM can ride recovering gold and copper prices. Trailing its smaller gold peers, we see an emerging value proposition on offer in NCM, which benefits from mine diversification, solid margins, and long-life reserves.
James Rutledge, portfolio manager of Perpetual's Pure Value Fund, is also bullish on the ASX 200 mining stock.
Addressing Newcrest shares, Rutledge said (courtesy of The Australian Financial Review):
The performance of the stock will no doubt be dictated by the performance of the gold price, but we see further upside to the stock as the market starts to appreciate Newcrest's increasing exposure to copper, as well as their potential growth opportunities.
Perpetual believes investors are underappreciating Newcrest's growth projects.
"Over the remainder of FY23, the release of studies on several growth projects such as at Havieron and Brucejack should see the market start to price in this growth," he said.
Another gold producer that could fly higher
Another ASX 200 mining stock that could have a strong year ahead is Gold Road Resources Ltd (ASX: GOR).
Gold Road has a market cap of $1.8 billion and pays a fully franked trailing dividend yield of 0.9%.
The Gold Road Resources share price is down 6.0% in the new year, currently trading for $1.58 per share.
The ASX 200 mining stock reported that its 2023 annual production is set to ramp up to a range of 340,000 and 370,000 ounces (170,000 — 185,000 ounces attributable) at an attributable AISC between AU$1,540 and AU$1,660 per attributable ounce.
Bell Potter recently raised Gold Road to a buy rating with a price target of $1.95 per share. That's 22% above the current price.
In December, analysts at Celeste Funds Management came out with a positive note on Gold Road, saying the miner can offer investors "low-cost gold exposure".
According to Celeste:
Gold Road presents an attractive growth profile through increasing grade at Gruyere, and their investment in De Grey Mining Limited (ASX: DEG) offers significant growth optionality.
Which brings us to…
The third ASX 200 mining stock focussed on gold
The third ASX 200 mining stock in our spotlight that could have a big year ahead of it is Evolution Mining Ltd (ASX: EVN).
Evolution Mining has a market cap of $5.9 billion and pays a trailing dividend yield of 1.8%, fully franked.
The Evolution share price is up 9.2% in 2023, currently trading at $3.25.
In its December quarterly results, Evolution reported a 3% increase in gold production to 166,404 ounces and a 27% reduction in AISC to AU$1,099 per ounce.
The gold miner maintained its FY23 production and AISC guidance at 720,000 ounces and AU$1,240 ounces, give or take 5%.
In mid-January, Fairmont Equities managing director Michael Gable said he expected the ASX 200 mining stock to see further share price increases in 2023.
"We're bullish about the outlook for gold in volatile and uncertain times across the globe," Gable said.
He added:
Evolution is one of the biggest gold miners on the ASX. The share price has risen from $1.81 on October 21, 2022, to trade at $3.33 on January 12, 2023. We expect the upward trend to continue. In our view, any short-term weakness presents a buying opportunity.
