Macquarie tips gold price to race to record high, says buy Northern Star, Regis Resources

A stronger greenback also benefits Australia-based gold miners as they sell gold in US dollars, but incur operating costs in Australian dollars. On Friday, the Aussie dollar weakened against the US dollar to buy $US66.5¢, after the University of Michigan inflation data topped expectations.

Stock picks

The ASX’s largest gold miner, Newcrest Mining, added 1.6 per cent to $28.70 on Monday after it accepted Newmont’s $26 billion takeover bid at an implied valuation of $29.70 per share on a 30.4 per cent premium to the price before the deal was announced in February.

But Macquarie’s preferred stock picks among the local gold miners are Northern Star Resources and Regis Resources thanks to the duo’s organic growth opportunities, which offer potential to lift total production.

Macquarie said Regis had received government approvals for its McPhillamys project in NSW, with an anticipated definitive feasibility study for the tenement a key catalyst for the share price. It has a $2.90 valuation on Regis shares and outperform rating, versus the market price of $2.11 on Monday.

The broker also rates Northern Star as a buy, with a $15 share price target, versus Monday’s price of $13.85.

Among the junior producers, Macquarie’s preferred picks are De Grey Mining and Bellevue Gold.

“De Grey released solid infill and extensional results from Mallina’s Toweranna regional deposit as well as positive results from ore sorting test work which, in our view, could lower operating costs for the deposit,” the broker wrote.

Elsewhere in the mining sector, Morgan Stanley’s global commodities team updated its preferred stocks picks for the second quarter of 2023 based on a mixture of qualitative and quantitative criteria.

In the gold space, the broker likes South African giant AngloGold Ashanti and Northern Star. It said the latter had a free cash flow yield estimated at 8.7 per cent in financial 2024, which was among the highest among miners under its coverage.

In the green metals or energy transition space Morgan Stanley rates Canadian copper miner Teck Resources a buy.

The group is a takeover target for Swiss mining giant Glencore amid a flurry of merger and acquisition activity across the green metals sector. This also includes the $US10.6 billion merger between Allkem and Livent and Albemarle’s $5.5 billion takeover offer for Liontown Resources.

Morgan Stanley’s preferred base metal is aluminium after copper prices extended losses in 2023. The broker forecast iron ore prices in 2023 to match those averaged in 2022. It rates aluminium and iron ore giant Rio Tinto a buy, with a $124.50 share price target.