Gold stocks have certainly delivered some excellent gains as a result of the strong rally in the gold price over the past year, but for those looking to pick the next winner, it sometimes helps to ask the experts.
The analyst team at UBS has put together a list of its top five picks in the emerging gold space, with price targets as much as 120% above current levels.
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Where to for commodity prices?
Firstly, let's look at their gold price forecasts for the coming year.
UBS expects the price of gold to remain relatively steady, rising slightly from the current level of about US$5,000 to US$5,075 in FY27, before dropping back to US$4,575 in FY28.
As they said in their research note this week:
Our price forecasts align with UBS Precious Metals strategists' views, which see an average of US$5,200 for CY26 before the rally fades. We wrote recently that risks remain skewed to the upside in the face of ongoing global uncertainty, and we expect gold to continue to benefit from shifts out of US assets. Interest has heightened across institutional and retail investors and the strength of demand has (so far) more than offset any attempts to take profits. The key drivers remain uncertainty relating to the Middle East conflict and geopolitics, ongoing trade tensions and the modest outlook for global growth, de-dollarisation but also gold offering an alternative in times of currency uncertainty.
Local companies set to benefit
Looking at the Australian emerging companies, UBS said, "strong volume growth and gold prices remaining elevated provides a healthy pathway to higher earnings and cashflow''.
UBS' top pick among the emerging miners is Pantoro Gold Ltd (ASX: PNR), for which it has a $7.50 price target compared with the current share price of $3.67.
Pantoro produced 41,623 ounces of gold for the half year but is continuing to explore for gold around its Norseman operations with a view to increasing production to 200,000 ounces per year in the medium term.
UBS' second pick is Westgold Resources Ltd (ASX: WGX), for which it has a price target of $10.25 compared with the current share price of $6.06.
UBS said the company's production target of 470,000 ounces by FY28 "looks conservative'' and there were also cost efficiencies to be had.
UBS' third pick is Minerals 260 Ltd (ASX: MI6), which it has a price target of $1.20 compared with the current price of 62.5 cents.
The company recently agreed to a $220 million funding package to accelerate its Bullabulling gold project, which has a mineral resource of 4.5 million ounces of gold.
UBS' fourth pick is Catalyst Metals Ltd (ASX: CYL), for which it has a price target of $11.25 per share compared with the current price of $6.42.
The team said Catalyst was targeting low capex production growth with strong free cash flow yields.
And finally, UBS' fifth pick is Ora Banda Mining Ltd (ASX: OBM), for which it has a $1.60 price target compared with the current price of $1.40, with the company having a pathway to producing 200,000 ounces of gold per year by FY29 while maintaining strong free cash flow yields.
