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14/5/2018 — Gold
Gold hedging sound across the ditch

A Perth and Hong Kong based broking house and fund manager Argonaut Research said that while there were fluctuations in currencies in April there was, for gold producers in Australia, a comfortable hedge position for those undertaking the process.

The gold price hovered around $A1,750 per ounce.

Argonaut said some producers had hedge books at lower prices and may now look to bolster their positions to increase their weighted average hedge price.

Near term gold producers in Western Australia such as Dacian Gold and Gascoyne recently negotiated a pre-production hedge to insulate against price volatility in the early life of their projects while St Barbara added to its hedge for 2018.

Leading producer Newcrest Mining increased its hedge position for future Telfer mine production, with the largest hedge in the ASX gold stocks at +1 million oz.

Gold prices have risen by 10% in $A terms and 7% in $US terms in FY18 year to date.

Emerging gold plays in Australia have fared well, evident from the surge of the ASX Small Resources (XSR) Index which has risen by 48% FY18 YTD.

Argonaut’s key picks in the emerging producers are Dacian Gold, Gascoyne Resources and Gold Road, and it identified as the next level of emerging plays Explaurum Ltd with its WA wheatbelt discovery, and Genesis Minerals.

Both have advanced project studies looking to make the transition into production.

However, Argonaut noted with the booming Australian gold scene that average all-in sustaining costs (AISC) had risen in the March quarter by 5% to $A1,064/oz.

The report said Australian listed gold producers were now outperforming North Americans.

“We argue the premiums for quality names in the gold sector are largely being driven by North American investment. US names have returned roughly -3% value in FY18 whereas the average return for ASX names has been +5%.”

PDF File Argonaut gold report (1.0 megabytes)
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Newcrest Mining’s mature Telfer gold mine in Western Australia’s Pilbara hinterland.