Is this the very best ASX 200 gold stock to buy now?

Is the best gold miner money can buy right now? Bell Potter appears to believe it could be.

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There are a good number of options for investors to choose from in the gold sector, but one of the best ASX 200 gold stocks to buy right now could be Capricorn Metals Ltd (ASX: CMM).

That's the view of analysts at Bell Potter, which believe the gold miner's shares are undervalued at current levels.

What is the broker saying about this ASX 200 gold stock?

According to a note, the broker has been running the rule over Capricorn Metals following a couple of recent developments.

It feels that the ASX gold stock has all the qualities required to trade at a premium to sector averages. So, with its shares pulling back materially due to a surprise weather-related quarterly production miss, its analysts feel that investors have been gifted a great opportunity to pick up shares. It explains:

We have reviewed our sector-based valuation metrics in the context of a pullback in the CMM share price and the recent 26% increase in the Ore Reserve at CMM's 100%-owned Mt Gibson Gold Project (MGGP). We have also reviewed CMM's track record of project construction and commissioning and delivery to production and cost guidance, which screens as one of the most reliable in the sector.

Combined with CMM's sector leading cash generation, we take a view that CMM should trade at a premium to sector average valuation metrics. As such, we view CMM's current market valuation as an attractive entry opportunity to the stock.

What else is the broker saying?

Bell Potter highlights that the Mt Gibson Gold Project is a high quality operation with significant growth potential.

And with a resource update on the horizon, it feels that the ASX 200 gold stock could get a boost when it is released. It adds:

The MGGP is one of the largest undeveloped stand-alone gold projects in Australia, with a Resource of 125Mt @ 0.8g/t Au for 3.3Moz and Reserve of 62Mt @ 0.9g/t Au for 1.8Moz.

We view the MGGP as highly prospective for further Resource growth, which is a focus of current drill programs. We anticipate a Resource update in the September quarter 2024 being a positive catalyst for CMM. The MGGP sits on granted Mining Leases and is currently progressing through permitting, with updates expected in the coming month. Combined with CMM's funding capacity, which will help preserve equity value through the development phase, and CMM's strong track record of project development, we view the path to production and commercialisation as relatively low risk.

Big returns 

The note reveals that Bell Potter has a buy rating and $6.50 price target on the company's shares. This implies potential upside of 36% for investors over the next 12 months. It concludes:

CMM is a sector leading gold producer with a strong balance sheet, clear organic growth options and a management team with an excellent track record of delivery. The MGGP continues to be advanced toward development and will position CMM as a ~270kozpa, top-10 ASX-listed gold producer.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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