There are plenty of quality options for investors to choose from on the Australian gold industry.
But one of the very best could be Capricorn Metals Ltd (ASX: CMM).
That's the view of analysts at Bell Potter, which believe that this ASX gold share could be undervalued at current levels.
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What is the broker saying about this ASX gold share?
According to a note this week, the broker was pleased with the gold miner's performance during the fourth quarter. It notes that its production was a touch ahead of expectations.
And with the miner's costs among the lowest in the industry, it believes that the company delivered a sizeable cash flow for the 12 months. It said:
CMM has reported June quarter 2024 production of 26.8koz gold (vs BPe. 26.5koz) from its 100%-owned Karlawinda Gold Project in WA. All-In-Sustaining-Costs (AISC) were A$1,548/oz (vs BPe A$1,267/oz). The production result was in-line with our forecasts and CMM guidance (revised lower in April 2024).
For FY24, CMM produced 113koz at AISC of A$1,421/oz (vs BPe 113koz at AISC of A$1,396/oz). While costs came in ~4% above the top of the guidance range, we view it overall as a good result. Costs remain among the lowest of ASX-listed gold producers and we estimate operating cash flow of ~$145m for FY24. This has funded all capital growth and exploration expenditure, supported the buyback of CMM's project finance hedge book enhancing gold price exposure and strengthened the balance sheet.
Time to buy
In light of its strong quarterly update, Bell Potter thinks that now could be an opportune time for investors to buy this ASX gold share.
The note reveals that the broker has reaffirmed its buy rating with a trimmed price target of $6.38.
Based on the current Capricorn Metals share price of $5.30, this implies potential upside of more than 20% for investors over the next 12 months.
Bell Potter thinks that Capricorn Metals is a buy for a number reasons. It highlights that it is a sector-leading gold miner, has a strong management team, and plenty of growth opportunities. It concludes:
CMM is a sector leading gold producer with a strong balance sheet, management team with an excellent track record of delivery and clear organic growth options to lift group production to 270kozpa. We retain our Buy recommendation.
Overall, this could make it a great option if you are looking for exposure to the rising gold price.
