Broker Upgrades: Argonaut ups gold bets as prices moon

Argonaut upgrades gold forecasts by 11-35% over the next five years, tipping a US$3000/oz peak in 2026
Ramelius, Bellevue, Ora Banda and Spartan see upgrades
Turaco Gold initiated by WA brokerage as a spec buy

Argonaut lifts bets on gold

WA brokerage Argonaut has gone bullish on gold, tipping even more joy for Australian miners riding the wave of surging prices for the safe haven commodity, lifting recommendations on a host of ASX stocks.

A note to clients this week from respected mining analysts Hayden Bairstow and Patrick Streater saw the Perth stockbroker and corporate advisory firm put a rocket under key gold names with an 11% lift in its FY25 gold target from US$2388/oz to US$2644/oz, close to current spot levels.

Argonauts’s FY26 target has risen 26% to US$2925/oz, with FY27 up 35% to the magical US$3000/oz mark, FY28 up 26% to US$2700/oz and long run prices, critical for stock valuations, up 8% to US$2000/oz, or $3080/oz Australian.

It comes after Goldman Sachs lifted its long run gold forecasts to US$1950/oz this week, a prediction that placed a number of mid-tiers into discount territory.

Monsters of Rock: Gold’s at US$2650, Aussie miners are barely pricing in US$1900

“Gold prices have continued to surge, with spot prices now up close to 30% since the start of 2024,” Argonaut’s Bairstow and Streater said.

“Uncertainty over the pace of forecast interest rate cuts, ongoing inflation and rising US Government debt are all likely to continue to drive a favourable pricing environment for gold.”

Producers see big upgrades

Unsurprisingly, the price increases have led to material upgrades to Argonaut’s group of gold stocks under coverage.

The most extreme is small Mid-West producer Catalyst Metals (ASX:CYL), up 47% to $4.40 a share, with Northern Star Resources’ (ASX:NST) and Genesis Minerals’ (ASX:GMD) price targets 8% higher to $19.50 and $4, respectively.

Ramelius Resources (ASX:RMS) (+13% to $2.60), Westgold Resources (ASX:WGX), (+15% to $4.50), Capricorn Metals (ASX:CMM) (+17% to $9), Vault Minerals (ASX:VAU) (+18% to 53c), Gold Road Resources (ASX:GOR) (+20% to $2.10), Bellevue Gold (ASX:BGL) (+23% to $1.60), Regis Resources (ASX:RRL) (+23% to $2.70) and Ora Banda (ASX:OBM) (+19% to 75c) have also been lifted substantially.

Market leader Northern Star’s earnings are up 35% for FY25, 88% for FY26 and 146-254% for FY27-30, when it will have hit its 2Mozpa production target and hit its full 900,000ozpa runrate from Kalgoorlie’s revamped Super Pit, where a giant new mill is currently being built.

“The upgrades for the mid-cap producers are mixed. Lower cost producers CMM and RMS see modest upgrades of 13% and 15% for FY25, while BGL’s earnings forecast rises 19%,” Bairstow and Streater said.

“Higher cost producers and companies that have recently completed acquisitions that carry higher depreciation underpin higher upgrades.

“We note that WGX, GMD and OBM see FY25 earnings upgrades of ~30%, while GOR, RRL and VAU see upgrades of 40-60%. Earnings upgrades for FY26 and beyond are 100-200% for most of the mid cap producers, with only CMM and GOR sees upgrades of <100% for FY26-FY30.”

African producers Perseus Mining (ASX:PRU) and West African Resources (ASX:WAF) have seen 20% and 13% jumps in their price targets, with a number of explorers in WA and Africa also seeing their price targets lifted. Earnings upgrades for FY25 and FY26 are 26% and 35% respectively for the cohort, with FY26-27 upgrades of 69-78% for PRU and 61-63% for WAF.

That’s some serious dough.

There are some recommendation upgrades here as well. Ramelius, Bellevue and Ora Banda have all been moved from hold to buy, taking the bulk of the Australian gold sector into buy territory. Spartan Resources (ASX:SPR), which has 225% over the past year as the remarkable high grade nature of its 1.5Moz+ Never Never and Peppers discoveries near Mt Magnet have revealed themselves, has been moved from a hold to a spec buy with a $1.55 price target.

Bairstow and Streater say their preference is for stocks with ‘strong organic growth potential’, led by GMD, WGX and CMM, with GMD and CMM’s five-year growth CAGR of 20% doubling the rest of their coverage universe.

They say there remains strong value across the sector, with De Grey Mining (ASX:DEG), and African development plays WIA Gold (ASX:WIA) and Tolu Minerals (ASX:TOK) also key picks.

“Our bullish outlook for the yellow metal and material upgrades to our earnings outlook underpins our shift to a positive view across all stocks in the sector,” Bairstow and Streater said.

Turaco Gold makes its mark

The bullish new gold sector upgrade from Argonaut comes under two weeks since Streater initiated coverage on Turaco Gold (ASX:TCG) on the back of a site visit at the Afema project in Cote d’Ivoire.

Since acquiring the site in November last year, drilling has underpinned a maiden resource of 2.52Moz at 1.2g/t.

Argonaut has placed a spec buy rating and 49c valuation on the $240 million capped junior, which plans to complete a PFS by the first half of 2026 at Afema.

Formerly in the portfolio of African gold giant Endeavour Mining, TCG purchased its majority 51% stake last year, with the right to move to 70% once the PFS is complete for the payment of US$8.75m in cash and 46.5m to junior JV partner Sodim.

While the PFS is some way off, Streater said Argonaut estimates $425m of pre-production capex and working capital requirements will be needed, with TCG likely to move to a 100% ownership level, converting Sodim’s minority interest to a 2% NSR royalty.

Under that scenario, the Cote d’Ivoire Government would take a 10% free-carried interest in the project with a five-year tax holiday, 0.9% NSR royalty to state miner Sodemi and 6.5% state royalty on gold sales over US$2000/oz.

The views, information, or opinions expressed in this article are solely those of the broker and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.