Gold prices are soaring: Which ASX gold miner has the highest upside?

Gold is basking in the spotlight after prices soared to a record close of US$2,114 an ounce on Monday, driven by an easing US dollar, rising rate cut expectations and weaker-than-expected US manufacturing data.

Gold prices rallied 3.4% or US$70 an ounce between last Friday and this Monday. The breakout sparked a strong reaction among local gold miners, with most names up more than 10%.

ASX Gold Miners Performance

Here's a recap of how all the gold names in the All Ords have performed over the past two days. The below data has been sorted by one-year performance.

Data as at 12:00 pm AEDT on Tuesday, 5 March 2024

Gold Miners With the Most Upside

The below data has been sorted by stocks with the most upside to broker consensus targets. It's worth noting:

• The database did not contain any consensus data for Emerald Resources, Kingsgate, Newfield Resources and SSR Mining

• Small-to-mid cap stocks may have limited consensus data and subject to more abnormal share price targets (this may be the case for St Barbara and Predictive Discovery)

'Target price' is an aggregate of Refinitiv broker target prices. Data as at 12:00 pm AEDT on Tuesday, 5 March 2024

Upside for African Gold Miners

It's always interesting to see the persistent upside for African gold miners – Resolute Mining and West African Resources.

Resolute Mining is a $770 million market cap miner. It's key production assets assets are the Syama gold mine in Mali and the Mako gold mine in Senegal. The company's latest result (29 Feb for the full 2023 calendar year) was largely in-line with analyst expectations and reaffirmed 2024 production guidance of 345-365,000 ounces at an AISC of US$1,300-1,400 an ounce (up from US$1,250-1,350 an ounce).

"Execution of Syama's expansion is important as is any life extension to Mako. RSG plans to provide an updated three-year outlook 'in due course,'" Macquarie analysts said in a note.

Resolute Mining 12-month price chart (Source: Market Index)

West African Resources is a $1.0 billion market cap producer operating the Sanbrado Gold Operation and Kiaka Gold Project in Burkina Faso. The stock sold off sharply on 6 February after the company lifted its AISC guidance for Sanbrado to US$1,300 an ounce (Macquarie previously forecasted around US$1,000 an ounce). The revised cost guidance led to a substantial 12-22% reduction in Macquarie's EPS forecasts between 2025 to 2028.

Additionally, the company said it expects growth capex of US$230-270 million for the year, significantly higher than the US$145 million projected by analysts.

Despite the bumps in costs and capex, WAF guided to 190-210,000 ounces of production in 2024 and has a relatively clear pathway to more than 400,000 ounces per annum by 2025.

To add some perspective, an Australia-based peer like Ramelius (ASX: RMS) has a market cap of around $1.8 billion and forecast to produce 272,7000 ounces in FY24 and average 211,575 ounces per annum through to FY28, according to Macquarie.

West African Resources 12-month price chart (Source: Market Index)

Putting it all together

Brokers maintain a cautious stance on gold stocks. Larger cap miners like Northern Star, Evolution, Bellevue Gold, Ramelius and Gold Road average an upside of just 8.2%. Analysts favour Africa-based names due to their strong production profile and growth prospects, yet they consistently trade at a significant discount to local counterparts (and this gap rarely closes). However, in a market where gold prices continue to climb, everyone gets to shine.