With the gold price trading around record highs, a number of ASX 200 gold shares have been rallying strongly this year.
This has seen the S&P/ASX All Ordinaries Gold index rise 22% since the start of the year.
But if you thought you were too late to the party, think again!
That's because analysts at Ord Minnett believe that one ASX 200 gold share could still deliver market beating returns over the next 12 months.
Which ASX 200 gold share?
The gold share in question is Western Australia-based gold miner Westgold Resources Ltd (ASX: WGX).
It is the owner of a number of projects including the Bryah, Murchison, Meekatharra and Cue operations that are spread across 1,300 square kilometres in the Murchison region.
In FY 2024, the company reported a 9% increase in revenue to $716 million and a 62% jump in EBITDA to $271 million. This was driven by a stronger gold price and lower unit costs, which offset softer production of 227,237 ounces.
Ord Minnett believes it is onwards and upwards from here for the ASX 200 gold stock. Especially given its merger with Karora Resources, which is expected to support the almost doubling of its production in FY 2025. It commented:
Westgold recently merged with Karora Resources and is now expected to produce circa 410,000 ounces of gold in FY25. We see production increasing to more than 480, 000 ounces per annum by FY26 for at least four years, along with decent free cash – we estimate around $210 million per annum on average.
The broker also sees scope for Westgold Resources to outperform its expectations due to the Fletcher Zone (Beta Hunt) prospect. It adds:
We also see upside risk given the growth outlook and the exploration appeal from the Fletcher Zone (Beta Hunt) prospect, but we balance this slightly against potential near-term negative surprises as the merger is bedded down in the first half of FY25.
Big returns potential
In light of the above, the broker recently initiated coverage on the ASX 200 gold stock with an accumulate recommendation and $3.10 price target.
Based on the latest Westgold Resources share price of $2.56, this implies potential upside of 21% for investors over the next 12 months.
In addition, the broker is forecasting a modest 3.5 cents per share dividend in FY 2025. This represents a 1.4% dividend yield at current levels, which boosts the total potential return to approximately 22%.
