During the trading week beginning on 27 September, twelve ASX gold miners hit 52 week lows. From the Top Ten mining companies, five felt the pain, including the three largest miners on the ASX. Here are the eleven, listed by market cap:

  1. Newcrest Mining (NCM) $18.5 Billion
  2. Northern Star Resources (NST) $10.1 Billion
  3. Evolution Mining (EVN) $6.5 Billion
  4. Regis Resources (RRL) $1.5 Billion
  5. Silver Lake Resources (SLR) $1.2 Billion
  6. St Barbara Limited (SBM) $960 Million
  7. Westgold Resources (WGX) $693 Million
  8. Resolute Mining (RSG) $453 Million
  9. Dacian Gold (DCN) $193 Million
  10. Medusa Mining (MML) $149 Million
  11. Auteco Minerals (AUT) $125 Million
  12. Beacon Minerals (BCN) $111 Million

Conventional wisdom suggests the price of gold rises in times of economic uncertainty or decline and recedes in the face of global economic growth. The following 20 year price chart from goldprice.org generally supports that view.

The onset of the Great Financial Crisis (GFC) in mid-2007 and the subsequent sluggish global economic recovery drove the price of gold to a new all-time high in 2011. The early impact of the global COVID 19 Pandemic did the same, reaching a new all-time high in mid-2020. With the availability of vaccines and the prospects for recovering economies improving in early 2021 the price of gold fell again followed by a brief uptick as the Delta Variant sprang up around the world.

Despite the variant, economic forecasts remain moderately positive, although estimates have declined both here in Australia and the US. Few experts are predicting a return to recessionary conditions.

Newcomers to share market investing might assume the fate of the miners who extract the precious metal from the earth follow the fortunes of gold pricing. This is not always the case, as a recent comparison from au.finance.yahoo.com of one of the largest Gold ETFs – the GLD – against one of the largest Gold Miner ETFs – the GDX.

A moderately optimistic outlook on a global economic recovery might hamper a new breakout in the price of gold, but the specter of the Chinese economy faltering should the Evergrande crisis take a turn for the worse remains. In addition, the US Federal Reserve is hinting of a sooner than expected hike in interest rates there, driving up yields on US Treasuries. Low interest, low yield environments are bullish for gold.

Analyst estimates are subject to change, but of the dozen miners hitting bottom this week, seven have double digit two year earnings growth forecasts.

Investors should take note of the drop in the price of gold from 2012. Despite that the number 2 – Northern Star – and the number 3 – Evolution — biggest ASX gold miners managed to maintain dividend payments and share price appreciation over the last decade.

Cost control is a partial explanation. Miners of all commodities pay little attention to the cost of doing business when the price of their commodity is booming. Gold miners adopted a new scheme for reporting their costs called the All in Sustaining Cost (AISC) which includes not just the costs of operating the mines, but all costs of operating the entire business. Both gold and iron ore miners looked for and found ways to cut operating costs substantially.

Low AISC allows gold miners to maintain profitability in the face of falling gold prices.

The following graph from VanEck shows how the global gold mining community responded to falling gold prices in 2012. With the current gold price of USD$1759.04 as of 1 October, low AISC’s can maintain healthy profitability. The higher Australian gold price — $2541 – reflects the dollar exchange rate. ASX miners costs are paid in lower Australian dollars with miners benefiting from commodity sales in US dollars.

Northern Star vaulted into the number 2 spot among ASX gold miners through an aggressive acquisition strategy, with Saracen Minerals being the latest. The company has two mining hubs here in Western Australia and one in Canada.

The company has grown revenue and profit in each of the last three fiscal years, with massive increases in FY 2021 spurred by the pandemic. Revenues were up 40% and profit up 300% with an AISC of AUD$1438 over the full year.

For FY 2022 Northern Star is expecting production of 1.55 to 1.65 Moz (million ounces) at All in Sustaining Costs between AUD$1475 and $1575. For FY 2021 the average annualised gold price received was AUD$2277 per ounce.

Evolution has four operating gold mines and one gold/copper/silver mine here in Australia along with an operating gold mine in Canada. The company’s Full Year 2021 Financial Results were modest at best, with a 4% decline in revenues and a 14% increase in net profit after tax (NPAT).

On the last day of the trading week ending on 1 October the Evolution share price got a boost from the news of regulatory approval for the development of a new underground mine at the company’s Cowal gold operation in New South Wales. In addition, all ASX gold miners got a bump from market jitters driving up the price of gold.

Evolution qualifies as a low cost producer, with and AISC of AUD$1,042 per ounce. In a bold change of pace, the company opened its Full Year Financial Results Presentation with a three year outlook, in contrast to the usual practice of tucking the outlook statement at the end.

The company sees production increasing from a range of 700,000 ounces to 760,000 in FY 2022 to 940,000 to 1,010,000 by FY 2024, with impressive AISC forecasts in each year. For FY 2022 Evolution expects AISC between AUD$1,220 and1,280 in FY 2022: $1125 to $1185 in FY 2023 and $1170 to $1230 in FY 2024

Regis Resources is a leading mid-tier gold producer and explorer, with multiple assets in the gold fields of Western Australia and New South Wales. The Duketon Project in Western Australia has three operating gold mines with a joint venture with Anglo Ashanti Gold at Tropicana. The Tropicana project is 30% owned by Regis and 70% by Anglo Ashanti. Regis is also developing the McPhillamys Gold Project in New South Wales. The approval and other delays in progress on McPhillamys appears to be contributing to Regis’s share price decline, adding to the concerns over the price of gold.

For FY 2021 the company reported an increase of 8.3% in revenues and a 5.9% rise in production. NPAT fell 35%, but as is customary when a company shows a loss, a positive increase in EBITDA (earnings before interest taxes depreciation and amortisation) is cited as a worthy substitute. Regis increased its EBITDA by 2.3%. AISC for FY 2021 was $1,372, up from $1,246 in FY 2020.

For FY 2022 the company is forecasting increased production and lower AISC.

Silver Lake is another mid-tier gold miner with two operating gold mines in Western Australia. FY 2021 Financial Results were spotty, with a 9% decline in gold production; a 6% increase in revenue; a 12% increase in EBITDA; a 15% increase in AISC; and a 62% drop in NPAT, due to a one off expense. Normalised profit rose 6%.

For FY 2022 Silver Lakes is forecasting modest growth in group sales of gold and an increase in AISC to between $1,550 and $1,650, up from $1,484.

Westgold Resources has grown both revenue and profit in each of the last three Fiscal years, with profit more than doubling between FY 2020 and FY 2021 – from $34.6 billion dollars to $76.8 million.

The company employs a “hub and spoke” operating model, with six underground and open pit mining “spokes” supplying three processing “hubs” in the Murchison region of Western Australia.

For FY 2022 Westgold is forecasting a production increase from 245,111 ounces per annum to 270,000 ounces. AISC are on the high side, between $1,500 and $1,700 per ounce. In FY 2021 AISC for all operations was $1,518.

Resolute Mining and Dacian Gold both have outsized 2 year earnings growth forecasts since both started from a low base – a loss of 1.2 cents and 2.3 cents per share respectively.

Resolute has three operating gold mines in Africa. The company divested its sole Australian holding, the Ravenswood Mine in Queensland, to focus on expanding its African operations. The company follows the calendar year. Full Year 2020 Results were reported in early 2021 with the company overcoming a massive $98 million dollar loss in FY 2019 to post a profit of $20.7 million in FY 2020. Half Year 2021 Results were disastrous, with gold production and sales, revenue, EBITDA, all down with a loss of $219.8 million dollars to top it all off.

The company has another African asset – the Tabakoroni Gold Project – showing “outstanding drilling results.”

Dacian Gold’s gold producing asset is the Mt Morgans Project in the goldfields of Western Australia. There are six exploration targets within the project. Dacian also has multiple highly prospective assets within another exploration target – the Redcliffe Gold Project.

Dacian has embarked on a five year mine plan to raise annual gold production in its permitted areas to 115,000 to 125,000 ounces per year at an AISC of $1,550 per ounce between 2024 and 2026. The company’s asset portfolio already has operational open pit and underground mines. The Five Year Plan is the culmination of the company’s exploration efforts defining resources and reserves to date.