The latest billion dollar business on the ASX
This is an older exclusive article for FinFeed subscribers which is now opened up. If you'd like to see new exclusive articles every week, please subscribe to our newsletter.
The ASX has a new billion dollar company.
Gold Road Resources (ASX:GOR) joined the exclusive billion dollar club, when its shares reached $1.14 on Friday 5 July.
The rise in share price and its market cap milestone, came on the back of joint venture partner, South Africa’s Gold Road, pouring its first gold bars at the Gruyere (yes, named after the cheese) Gold Project in Western Australia.
Gruyere’s first gold pour comprised three bars containing an estimated 1,139 ounces — worth about $2.2 million at today's gold price.
Gold Road Resources is developing Australia’s newest goldfield, the Yamarna Belt, 200 kilometres east of Laverton in Western Australia and holds interests in tenements covering approximately 6,000 km2 in the region.
The Yamarna Belt is historically underexplored and highly prospective for gold mineralization, which is what attracted Gold Road to the region. In November 2016, the company entered a 50:50 partnership with Gold Fields for the Gruyere Joint Venture covering 144 km2.
Gold Road’s ascendancy comes at an interesting time.
There is a modern day gold rush occurring and it is reflected in the price of gold which is sitting above $1400. The Australian dollar gold price hit a record $2,044 an ounce in June, up from a 12-month low of $1,615 per ounce.
The outlook is certainly bullish as DJ Carmichael’s Davide Bosio points out in this Finfeed podcast.
Further to this, the Department of Industry, Innovation and Science has forecast Australia’s gold exports to peak at more than $22 billion in the 2020-21 financial year, yet it comes at a time when analysts predict a fall in gold production.
The ABC reports, “there are concerns the industry will struggle to sustain current levels of production with mining leaders and analysts pointing to a lack of major new discoveries”.
The ABC goes onto report, “Behind only China, Australia's gold mines will produce an estimated 10.7 million ounces this year — the equivalent of about $19.2 billion worth of the precious metal.
But analysts predict Canada and Russia will overtake Australia, with production to fall more than 40 per cent to 6.3 million ounces over the next five years.”
Suffice to say any Australian company with a producing mine would be in a strong position to further improve its share price.
Gruyere has a 12 year mine life and is expected to create 350 full time jobs, making Gold Road one of the premier gold producers.
There are other Australian listed gold explorers enjoying the current climate.
Shares in Shree Minerals (ASX:SHH) lifted 14% on the back of promising auger soil assays at its Golden Chimney project.
Following the release of the latest results, Executive Director Sanjay Loyalka said, “We have entered an exciting period as the early indications from Golden Chimney highlight the fact that this project is mineralised and we move towards drilling these targets.
"Our gold and iron ore assets now represent two sectors that have been very strong in Australia and we look forward to updating shareholders as we add value to each of our key projects in the near term.”
Mako Gold (ASX:MKG) also experienced a slight rise this week following news that its entire Board acquired additional shares in the company, highlighting its confidence in its Napie Gold Project in Cote d’Ivoire.
These companies have a long way to go before they reach the heights of Gold Road, but they are representative of the generally positive sentiment surrounding the gold industry.
A new billion dollar capped, ASX listed gold company is certainly a noteworthy, newsworthy moment that could have broader industry ramifications.
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.