Why this lagging ASX 200 gold stock is set for 'strong recovery': fundie

The struggling ASX 200 gold stock is tipped for a strong comeback in the months ahead.

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S&P/ASX 200 Index (ASX: XJO) gold stock Gold Road Resources Ltd (ASX: GOR) has struggled in 2024 despite the rocketing gold price.

With global interest rates beginning to head lower while global conflicts are only heating up, the gold price has soared from US$2,058.96 per ounce on 2 January to trade at US$2,659.07 (AU$3,844) per ounce today.

Despite the yellow metal's near 15% gain, the Gold Road share price is down 12.6% year to date.

That compares unfavourably to rival ASX 200 gold stocks like Northern Star Resources Ltd (ASX: NST) and Evolution Mining Ltd (ASX: EVN).

The Northern Star share price is up 16.1% in 2024, while Evolution Mining shares have gained 16%.

But according to Fat Prophets' Angus Geddes, the second half of the year could see Gold Road shares playing some catch-up.

Indeed, that may already have begun, with the Gold Road share price up 12.6% since 9 September.

A woman stands in a field and raises her arms to welcome a golden sunset.

Image source: Getty Images

ASX 200 gold stock set for recovery

According to Geddes (courtesy of The Bull), "The first half result in 2024 was negatively impacted by severe weather reducing production and increasing costs. However, the impact was cushioned by record high gold prices."

As for what's ahead for this ASX 200 gold stock, Geddes added:

We expect a strong recovery for the company in the second half. The Gruyere gold mine remains a quality asset with high margins under normal operating conditions, and particularly as we expect gold prices to remain elevated.

There is much scope for turning more ounces into reserves at Gruyere.

What's been happening with Gold Road?

Gold Road reported its half year results, covering the six months to 30 June, on 26 August.

Core metrics included a 7.5% year-on-year decline in revenue from gold sales to $211.7

The ASX 200 gold stock reported gold sales of 63,542 ounces, down 20.7% from the prior corresponding six-month period. The miner said this followed "an unprecedented and protracted regional rain event".

The lower sales indicate that the company's consolidated net profit after tax was $43.1 million, down 22.6% year over year.

However, Gold Road maintained its annual gold production guidance at 290,000 to 305,000 ounces (145,000 to 152,500 ounces attributable). All in sustaining cost (AISC) guidance also remained at AU$2,050 to AU$2,200 per ounce.

The miner said it expected production at Gruyere to ramp up through the second half of 2024.

Commenting on the outlook for the ASX 200 gold stock at the time, Gold Road CEO Duncan Gibbs said:

The first half of 2024 was challenging with gold production and exploration efforts impacted by the regional rain events that forced the 7-week closure of the main access road to Gruyere.

Fortunately, Gold Road's unhedged production benefitted from record high gold prices. Gruyere is now well set to deliver against our expectations of this high-quality orebody.

I expect to see a ramp-up in gold production through the remainder of 2024 with a sustained improvement in mining rates to support higher levels of gold production in future years.

Motley Fool contributor Bernd Struben 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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