Gold Sector: Australian Gold Stock Tips

Gold has been goin’ on up for the past few weeks, and with Australia being the second biggest producer of gold in the wold, it may be worth your while to examine some of the gold stocks listed on the Australian Stock Exchange (ASX). Macquarie Research Equities (MRE) have reviewed and upgraded their gold price forecasts, and now expect gold to rise to a high of US$900/oz in 2007.

MRE has maintained their outperform recommendation on Lihir Gold (LHG) and have upgraded their share price target to $4.40 which is based on 20x CY07 earnings MRE notes that both NCM and LHG continue to trade at a material discount to their global peer group on almost all metrics.
Lihir Gold (LHG) has an extensive resource base, growing production profile, mid-level cash costs and recently increased exposure to spot gold prices combine to make it a highly leveraged "gold bull" investment. It is expected that 70% of CY06 production is to be sold at spot prices, LHG provides the cleanest leverage amongst the liquid Australian gold stocks to MRE’s bullish gold view. However the risk in Lihir lies in that it is a single asset company undertaking a major project expansion. Lihir Gold represents a large and liquid gold exposure by Australian market standards, it does have a higher risk profile than some of its more diversified global peers.
MRE has maintained their outperform recommendation on Newcrest Mining (NCM) and have upgraded their share price target to $31.50 which is based on 22x FY07 earnings MRE notes that while NCM remains a high-risk, short-term operating proposition, its copper leverage post-FY06 is impossible to ignore.
MRE believes that the Australian gold sector still represents reasonable value from a global perspective. MRE has also rated other smaller companies to outperform for Oceana Gold (OGD) with a new share price target $1.35 and Equigold (EQI) with a new share price target $2.30 while maintaining their outperform recommendation on Agincourt (AGC) adjusting their share price target to $2.40. Check your charts!