If you are looking for exposure to the gold sector while the precious metal is at record highs, then look no further!
That's because Bell Potter has just put a buy rating on the ASX 200 gold stock in this article.
Which ASX 200 gold stock?
The gold stock in question is Evolution Mining Ltd (ASX: EVN).
It is a leading gold miner with a collection of quality production operations: Cowal, Ernest Henry, Northparkes, Mungari, Red Lake, and Mt Rawdon.
Bell Potter highlights that its executive chairman, Jake Klein, has overseen a clear and consistent growth strategy that has driven continuous improvement of its asset portfolio.
It notes that starting with four gold mines producing ~350kozpa and a market capitalisation of ~$1.2 billion, the ASX 200 gold stock's asset portfolio has grown to six gold and gold-copper mines producing ~720kozpa gold plus 68ktpa copper (~1Moz gold equivalent) with a market capitalisation of $11.8 billion.
This makes it the second-largest Australian domiciled gold producer and a benchmark gold exposure on the ASX.
Why is it time to buy?
According to the note, Bell Potter believes now could be the time to buy this ASX 200 gold stock after it made a number of significant investments, which leave it well-placed to benefit from the strong gold and copper price. The broker said:
Over the last several years EVN has made significant investments in both organic and acquisitive growth, most recently acquiring 80% of the Northparkes copper-gold mine for up to US$475m, increasing to 100% ownership of the Ernest Henry copper gold mine for A$1.0 billion, the expansion of its 100% owned Cowal Gold Mine and the expansion of its 100% owned Mungari Gold Operations.
While parts of the market have viewed these investments as expensive, our view (particularly in light of the current gold price environment and copper price outlook), is that these investments have been well timed. EVN is now passing its CAPEX peak and we forecast increasing free cash flows, de-leveraging of the balance sheet and rising dividend distributions supported by EVN's near-unhedged gold and copper price exposure.
Buy rating
This morning, the broker has initiated coverage on Evolution Mining's shares with a buy rating and $6.65 price target.
Based on its current share price of $5.91, this implies potential upside of 12.5% for investors over the next 12 months. In addition, a modest 1% dividend yield is expected in FY 2025.
Commenting on its initiation, the broker said:
EVN offers effectively unhedged gold and copper exposure via a portfolio of high quality, long-life assets in Tier 1 jurisdictions. We remain constructive on the outlook for both metals and initiate our coverage on EVN with a Buy recommendation and NPV-based Target Price of $6.65/sh.
