Gold Digger: Gold miners could soar even higher if generalists fly in

• Gold prices are staggering, but miners still have some reasons to be cautious
• Fundies think gold equities could re-rate again once generalist money flows into producers
• Waratah and PolarX lead gains with NSW and Alaskan exploration milestones

The mood of attendees at this week’s Diggers and Dealers Mining Forum was cautious and subdued. Gold miners are happy, but now wary of pressures building up on the periphery.

Costs are one thing. Whether, with prices currently elevated near record highs, value can still be found in M&A is another.

That would rely on valuations for gold miners running further from here to a point that the cohort could look into the rear view mirror a few months or years on from now and say, in fact, in August 2025 they were looking cheap.

The ASX All Ords gold sub-index is up +42.72% YTD and close to 60% in a year.

Its monthly change has turned green after the disappointments of guidance downgrades and cost blowouts from reporting season have washed through.

Westgold Resources (ASX:WGX) is up close to 20% this week after taking investors on a site visit this week of its Beta Hunt gold mine and setting FY26 guidance of 345-385,000oz at AISC of $2600-2900/oz.

Broker Argonaut has extended its mine life expectations at Beta Hunt by seven years to 2043 and kept a buy on the stock despite cutting its price target 7-8% to $4.60 on the back of higher cost guidance.

Catalyst Metals (ASX:CYL) was the week’s top performing ASX 300 mining stock while Pantoro (ASX:PNR) was up 10% this week, with Argonaut maintaining a hold but lifting its PT 32% to $4.10 after a site visit and incorporating the Bullen Underground and an extension to the OK Mine.

At the commodity price end of the equation, the imposition of Trump’s Great Depression era tariffs and Israel’s escalation in Gaza have provided some safe haven appeal to the yellow metal, which is chasing US$3400/oz again.

After a return to form in the past week, are there catalysts ahead for further gold price and equity runs?

Generalists coming

Asset manager State Street gives a 30% chance of US$3500-3900/oz in 2025, with a 50% probability of its base case of US$3100-3500/oz persisting.

ETF performance has been strong at 397t for the first half. According to State Street, that’s the best half year in five.

But the plunge into precious metals remains far more muted than the fear-driven Covid bull market, which saw 734t added to ETF holdings by June 30, 2020.

“With global ETF holdings still ~7% below their October 2020 peak, the ongoing restocking cycle still has meaningful room to run which should support prices well-above $3000/oz,” State Street’s Aakah Doshi, Mohamed Abukhalaf and George Milling-Stanley said.

“If inflows accelerate and tighten physical balances, a bull case range of US$3500-$3900/oz remains in play.”

Fundies around the traps at Diggers are still bullish, in spite of at least one warning (from ever conservative goldie Evolution Mining (ASX:EVN)) that prices would, at some point, retrace.

“The gold miners are still trading on very low multiples, or attractive multiples, I should say,” Victor Smorgon Group gold fund portfolio manager Cameron Judd said.

“If we see more quarters of cash generation and maybe some M&A activity, I think that will definitely attract the generalists, and I think there is a lot more upside.

“Particularly when you look at a gold price at all time highs and then where the gold stocks are currently trading it, there’s a lot more ups on the gold stocks.”

Argonaut executive director and deputy chair Liam Twigger, one of Australia’s top mine sellers, said markets remained sceptical of the case gold miners would generate.

“The average all in sustaining cost for gold companies is about $2050-2100 an ounce and the gold price is over $5000/oz, so they’re making more than 100% margin,” he told Stockhead.

“I don’t think that’s ever happened before and the market is sceptical.

“I think that’s $4000/oz, maybe $4500/oz being priced in, not $5000. The market will want to see the earnings come through, the cash build up and then I think you could see another re-rating in the gold stocks.

“I’m not giving investment advice, but I think all gold producers go higher.”

Winners and losers

Here’s how ASX-listed precious metals stocks are performing:

Gold medal performers

Who were some of the top precious metals names this week?

Waratah Minerals (ASX:WTM)

No one in the gold space has had a week quite like Waratah, the owner of the Spur Gold Corridor in New South Wales.

Featuring many geos who worked on the giant Cadia mine in NSW (which is just 5km away) and showing similarities to the GRE46 discovery at Evolution Mining’s (ASX:EVN) Cowal gold mine, Monday’s revelation of a 208.7m hit at 1.17g/t Au from 514m at the Consols prospect powered a doubling of the explorer’s share price.

Now capped at over $150m, WTM is beginning to catch the eye at Spur, which now features over 1.5km of strike, 500m of that added with the hit in drill hole SPRCD062.

Blue Ocean Equities analyst Carlos Crowley-Vasquez, who focused specifically on NSW gold stocks, increased the broker’s price target from $1.20 to $1.50, saying he sees Spur as having a path to a +3Moz resource.

Blue Ocean has also dropped its downside scenario where Waratah makes no material discovery.

Watch this space.

PolarX (ASX:PXX)

Northern Star sponsored PolarX has emerged from the shadows this week with the start of a drill program at its Caribou Dome copper project in Alaska.

NST holds 16% of PXX, which is well placed with its Alaska Range project just 150km from its Pogo gold mine.

A US$2m loan from the Aussie gold giant has been used to fund drilling, with 2400m of diamond drilling planned to test depth extensions of the orebody and historical drill hole intercepts.

Part of the Alaska Range resource along with the Zackly deposit, Caribou Dome is presently small but high in grade, featuring 7.2Mt of measured, indicated and inferred resources at 3.1% copper and 6.5g/t silver for 224,375t Cu metal and 1.5Moz of silver.

The polymetallic Zackly boasts 4Mt combined indicated and inferred at 1.1% Cu, 1.6g/t Au and 12.6g/t Ag for 45,000t copper, 213,000oz gold and 1.63Moz silver.

PRX completed the necessary activities to claim an 80% interest in Caribou Dome, where little exploration was undertaken by other parties since 1970, in June last year.

But it has been exploring there since February 2015, publishing a maiden resource in April 2017 and update in June 2023, with the mineralisation now extending to more than 300m deep.

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