There are a lot of options for investors to choose from in the gold industry.
To narrow things down, let's take a look at one ASX gold stock that could be destined to surge from current levels.
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Which ASX gold stock?
The gold stock in question is Catalyst Metals Ltd (ASX: CYL).
It is an Australian gold miner and development company with operations in Western Australia and Tasmania. It owns three gold processing plants (two at the Plutonic Gold Operation in Western Australia, and one at the Henty Gold Operation in Tasmania).
According to a note out of Bell Potter, its analysts think that the gold miner's shares could be undervalued at current levels. Especially given its strong operational performance and positive growth outlook.
Commenting on its recent quarterly update, the broker said:
Gold production was 28.4koz (vs BPe of 25.9oz). Gold sales were 28.5koz (vs BPe of 25.9koz). The average gold sale price was A$4,010/oz vs BPe A$3,810/oz. AISC was A$2,352/oz a solid beat on BPe A$2,540/oz, driven by the production beat. Closing cash and bullion was $84m, up $26m from the previous quarter (following 4 quarters of cash build). Debt is zero (excluding equipment hire purchase). FY25 guidance was maintained at 105koz-to-120koz at A$2,300/oz-to-A$2,500/oz.
Big returns
In response to the update, the broker has retained its buy rating on the ASX gold stock with an improved price target of $4.45.
Based on its current share price of $3.44, this implies potential upside of approximately 30% for investors over the next 12 months.
Why is the broker bullish?
As mentioned above, its strong operational performance and positive growth outlook are key reasons why Bell Potter is bullish on the company.
It notes that Catalyst Metals is well-placed to achieve its goal of growing production to 200,000 ounces per annum by FY 2027. This is almost double the low end of its guidance range for FY 2025. It said:
CYL is hitting its marks on its plan to grow production to 200kozpa by FY27, and its exploration plans to at least sustain that production level beyond that. Reported progress on things we include in our DCF valuation include: (1) a sixth consecutive quarter of stable gold production from Plutonic (2) the first satellite mine (of 3, Plutonic East) will deliver first production in 3Q, and (3) underground mining approvals were received for the Trident satellite mine (production from FY26).
Bell Potter also points out that there is upside risk to its valuation of the ASX gold stock from drilling activities. It adds:
Additionally, CYL reported on matters that offer valuation upside beyond our DCF valuation, including: (1) 8 drill rigs are on site at the Plutonic Gold Operation, (2) Resource definition and extension drilling is targeting mine life extensions, to at least 5-years, at the 4-mines included in the 3-year production plan, and (3) first drilling results were reported beneath the Hermes Resource (not included in mine plans), which indicate the potential for mining 2-to-4, 100-to-300m strike length high-grade lodes. We see good progress towards our Target Price, and good growth potential beyond. Maintain Buy.
