With its prices touching record high, gold stock market has become hotter than expected. The weaker economic data and the prevailing uncertainty in the run-up to the 2024 presidential election is further pushing the safe haven demand for gold.
The coming weeks feature events that could further enhance this and bring gold investing to the fore. Two of the best gold mining stocks likely to be maximum benefitted are
De Grey Mining Limited (ASX: DEG)
De Grey Mining Limited recently announced robust results from infill drilling at the Brolga deposit within its Hemi gold project. This infill grade control drilling, reducing drill spacing from 40m x 40m to 20m x 40m, supports detailed ore production planning and stockpiling schedules, essential for the commissioning and ramp-up phases at Hemi. To date, approximately 60% of assay results have been returned, with the remaining results expected in the upcoming Mineral Resource Estimate (MRE) update. This MRE update is anticipated to reclassify the Mineral Resource for Brolga’s first year of production from JORC Indicated to JORC Measured, which will cover the initial 12 months of Hemi’s production profile. Results strongly align with the Definitive Feasibility Study (DFS) mine plan, forecasting a rapid capital payback from the Brolga Stage 1 pit, with payback period estimates reduced to 12 months at the current gold price of ~A$4,140/oz.
The quarterly activities report highlighted De Grey’s significant project financing milestones, including a $150 million loan agreement from the Australian Government’s Northern Australia Infrastructure Facility (NAIF). This funding will contribute to a planned $1 billion senior debt facility, along with a $130 million cost overrun provision, on track for completion by Q4 2024. De Grey’s current cash and short-term deposits of $828 million, supplemented by the senior debt facility, are expected to fully fund the Hemi development. The Hemi project’s economics continue to strengthen, with an updated DFS post-tax NPV of ~$2.9 billion (using a gold price of $2,700/oz), significantly benefiting from current gold prices of ~$3,950/oz.
De Grey is one of the best gold companies to invest in currently as it is also advancing ongoing exploration activities across the Aquila, Falcon, and Antwerp deposits, targeting further enhancements to the Hemi MRE and providing potential upside to the DFS production profile. Drilling plans at the Scooby prospect reflect the company’s proactive approach to resource expansion and project optimization.
Overall, these developments underscore De Grey’s progress in advancing Hemi toward operational readiness, backed by robust project economics and a well-structured funding package. The high-quality results from Brolga support De Grey’s strategy of de-risking the project as it approaches key approvals and final investment decisions, positioning the company for accelerated growth within the gold sector and create value for shareholders.
Ramelius Resources Limited (ASX: RMS)
Ramelius Resources Limited (ASX: RMS) announced a safe quarter for September 2024. No Lost Time Injuries (LTIs) have been reported since May 2023. The company produced 62,444 ounces of gold during the quarter. The All-In Sustaining Cost (AISC) was A$1,965 per ounce. However, excluding non-cash components, the AISC comes down to A$1,589 per ounce. Ore mining at the Cue project began better than scheduled and produced 35,359 tonnes of high-grade ore that graded 10.2 g/t and would feed production in quarters to come.
The financial side was also stronger, as Ramelius had better cash generation. The operating cash flow improved to A$111.2 million and the underlying free cash flow to A$89.6 million. Cash and gold reserves at the company stood at A$438.6 million, a marginal decline over the last quarter. The strong cash flow is anticipated to increase in FY25, particularly with the planned processing of high-grade ore from Cue and Penny. Additionally, Ramelius invested A$97.6 million in Spartan Resources, increasing its ownership stake to 18.35%.
The company, among the top gold companies outlined ambitious plans for future growth, including a new open-pit production target at the Eridanus project, estimated at 12 to 16 million tonnes at grades between 1.2 and 1.6 g/t, translating to 575,000 to 775,000 ounces of gold. Mill expansion at Mt Magnet is also underway, with an optimal throughput target set at 3 million tonnes per annum. The combined Pre-Feasibility Study for the Rebecca-Roe project is on track for completion by December 2024, and new exploration drilling programs are planned across multiple projects to enhance resource estimates.
In terms of operations, the Mt Magnet mine produced 41,019 ounces during the quarter, while Edna May produced 21,425 ounces, although production at Edna May faced challenges due to lower grade stockpiles. The AISC at Edna May was hard hit by a non-cash drawdown of existing stockpiles, and on reported AISC of A$2,799 per ounce. Guidance for FY25 is maintained with production target expected to be between 270,000 to 300,000 ounces and AISC in the range of A$1,500 and A$1,700 per ounce. Ramelius is committed to moving forward with safety improvements, targeted production, and enhanced exploratory activities in the remainder of the quarters.
(Source: Company’s Report)
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