Berenberg highlights gold mining picks as prices hit record

Prices have risen 13% so far in 2023 on the back of dollar weakness, elevated geopolitical risks and dovish messaging from the Federal Reserve – but it could have further to run, Berenberg says.

The broker highlighted that gold has had its own 'Santa rally' over the past four years, rising an average of 3.7%. "We see this is as an opportunity to tactically play rising gold prices and generate some year-end alpha", the broker said, highlighting five key themes for investors who are interested.

Firstly, for those looking at large caps, it rates Endeavour Mining a 'buy', calling out its expected production growth in 2024 and 2025, and so-called all-in sustaining costs (AISC) of under $1,000/ounce.

For investors interested in turnaround stories, Berenberg thinks it's time to own Centamin shares after a 9% year-to-date fall. Shares have performed well recently as the miner starts to generate free cash flow from its Sukari mine in Egypt after a period of investment. There is exploration upside elsewhere too.

The broker also highlighted Pan African resources due to weakness in the South African rand, which should be supportive to the company from a USD cost basis. The company also offers low-cost growth from the Mintails project in SA and is expected to hit operational guidance.

For low-risk investors, Wheaton Precious Metals might be worth a punt, Berenberg said, due to its portfolio of streams which "spreads operational risk and protects against FX and margin pressure".

Lastly, Resolute Mining and Hochschild Mining are in the "torquey mid-cap bucket", the broker said, with both stocks having already surged this year, by 99% and 59%, respectively. Nevertheless, Berenberg still sees upside.