Gold Miners Reaping A Record Cash Harvest

Cash harvesting sounds more like farming than mining, but that’s the point reached by goldmining companies which are awash with cash after three years of high gold prices.

Top of the cash harvesting list, according to investment bank Goldman Sachs, is the world’s biggest miner of the precious metal Newmont Corporation.

Until recently most investor interest in goldminers has been as proxies for the gold price which has risen by 30% over the last 12-months thanks to central bank and institutional buying.

Newmont, on the other hand, has seen its share price rise by just 11.5% despite the bulk of its earnings being from gold with a secondary contribution from copper.

Goldman Sachs is tipping a continued rise in Newmont’s share price with a target for its New York listed shares set at $47.20, up 17% on last sales at $40.23 while the company’s Australian listed shares are forecast to rise from A$64.80 to A$76.20.

In a report focused on the Australian gold sector, the bank said that while gold finished last year up nearly 30% (and up 40% in Australian dollars) both Australian and global gold equities underperformed on average by 10%.

Gold Heading For $3000/oz

Strong central bank demand is expected to continue lifting the gold price towards $3000 an ounce from its current $2670/oz, according to Goldman Sachs, with the higher price being maintained until at least the middle of next year.

The bank also lifted its long-run gold price from $1950/oz to $2300/oz from 2029 onwards.

“We expect our Australian gold coverage is set for a growing cash harvest over the next 12-months as price increases outweigh cost escalations, supporting further balance sheet strength, growing capital returns and prospective merger and acquisition activity,” Goldman Sachs said.

Northern Star Resources, one of Australia’s gold sector leaders, has also earned a buy recommendation from Goldman Sachs thanks to strong production and improving free-cash-flow generation as well as value being created through the proposed takeover of emerging gold producer, De Grey Mining.

Bellevue Gold is one of Macquarie Bank’s top rated Australian gold stock ahead of annual and half-year reporting season and despite Bellevue’s 9% reduction in gold output guidance for 2025.

The production warning rocked Bellevue’s share price which has fallen by 44% over the last six months to A$1.08 with Macquarie tipping a recovery to A$1.70 over the next 12-months.

Value Gap

An even wider value gap can be found in a smaller gold producer, Alkane Resources, which has fallen by 25% over the last 12 months despite an expected increase in profits this year from steady gold production and a higher gold price.

Bell Potter, an Australian stockbroking firm, said Alkane continued to be undervalued based on output from its flagship Tomingley mine alone, tipping a 155% share price rise from last sales at A49c to a target price of A$1.25.