At time of writing, the share price of Gold Road Resources Ltd [ASX:GOR] is up 7.54%, trading at $1.07.
It has been a relatively steady rise for the GOR share price over the last 12 months.
You can see the stock’s correlation with gold prices in the chart below, with the two being negatively correlated of late – its outperforming gold today:
Source: tradingview.com
The latest news out of the company is that it has produced its first gold bars from its Gruyere project. The company is targeting production of up to 100,000 ounces this year.
Gold Road Resources aiming for mid-tier status
Gold Road Resources has a Tier 1 project located near Laverton in Western Australia, which is part of a 50% JV with Gold Fields Ltd — a South African gold giant that has a current market cap of approximately US$4.48 billion.
In an investor presentation released yesterday, the company touted its status as ‘Australia’s newest gold mine.’
Being so close to production has the benefit of giving you some sense for its valuation.
You can see some of the metrics below:
Source: newswire
The company is forecasting average annual production of 300,000 ounces, a 12–year mine life and importantly has room to grow the reserve with 100% Gold Road Resources owned tenements.
Its AISC is AU$1,025 (US$720).
How does Gold Road Resources stack up against other gold stocks?
As the company is commencing production this year, the stock is a little different to other gold stocks we have covered recently.
These include stocks like gold-giant Newcrest Mining Ltd [ASX:NCM] and mid-tier gold producer Saracen Mineral Holdings Ltd [ASX:SAR].
The main point of difference being that it has yet to turn a profit, so you can’t compare earnings multiples with other gold stocks.
But with a sizeable resource and production commencing, there could be significant further upside to the stock — particularly if the gold price continues its rise after a brief retracement.
While gold stocks offer a leveraged play on gold prices, there is always something to be said for physical ownership.
One of our editors, Greg Canavan, makes an excellent case for physical ownership. His analysis is spot on, and he runs you through the various geopolitical factors most pertinent to the metal. It can be accessed for free here.
Regards,
Lachlann Tierney,
For Money Morning