If you are wanting to gain exposure to the sky-high gold price, then the ASX gold stock in this article could be the way to do it if you have a high tolerance for risk.
That's because the team at Bell Potter believes it could more than double in value over the next 12 months.
Image source: Getty Images
Which ASX gold stock?
The gold stock that is being tipped as a buy by analysts at Bell Potter is Santana Minerals Ltd (ASX: SMI).
It is a gold explorer and developer, focused on the Bendigo-Ophir Gold Project (BOGP) in New Zealand.
The project covers 251km2 in the Central Otago goldfields, 90km northwest of OceanaGold's world-class Macraes Gold Mine, which is New Zealand's largest active producing gold mine.
Bell Potter highlights that the ASX gold stock has released an updated Pre-Feasibility Study (PFS) for the Bendigo-Ophir Gold Project. It said:
SMI calculates an NPV of A$1.5 billion at a gold price of A$4,950/oz, IRR of 65% and payback period of 1.7 years. SMI expects to submit its Fast-Track Approval in the current quarter, anticipating a permitting decision within six months of submission.
While its all-in sustaining cost (AISC) is expected to be higher than previous estimates, the broker highlights that this is immaterial in the grand scheme of things. It adds:
Compared with the PFS of November 2024 pre-production CAPEX is reduced from A$340m to A$277m on reduced pre-strip volumes and a smaller process plant. These benefits are offset by higher AISC and lower gold production rates, which lower our unrisked valuation by 5-10%.
However, this is relatively immaterial in the context of a predevelopment mining project and sits within the margin of error of the PFS. In our view, our reduced project valuation is more than offset by a lower funding requirement, reduced financial risk and benefits to practical aspects of operating the project. Financial metrics remain compelling and among the most attractive in the sector.
Big return potential
In response to the updated PFS, Bell Potter has retained its speculative buy rating on the ASX gold stock with a $1.18 price target.
Based on its current share price of 54 cents, this implies potential upside of almost 120% for investors over the next 12 months. It concludes:
SMI held cash of $55m at end March 2025 and has achieved a major milestone with the completion of the updated PFS. It is well placed to complete its Fast Track application, commence early site works in 2HCY25, make a Final Investment Decision in early CY26 and commence construction in 1HCY26. It remains one of the nearest term, new gold development projects on the ASX. Our valuation is lowered to $1.18/sh and we retain our Speculative Buy recommendation.
