The ASX gold sector finished the June Q with a strong performance thanks to continued gains in AUD gold prices. In the June Q, the weighted average all in sustaining cost (AISC) was $1,055/oz (vs $1,064/oz in March Q, -1%) versus a gold price of $1,726/oz ($1,691/oz in Mar Q +2% Q-o-Q). The gold price reached a high in AUD terms of A$1,769/oz (US$1,314) in May, its highest since September 2016. Argonaut’s gold coverage universe trades at ~1x P/NAV (vs 1.2x in early Sep Q). Production and costs bounced back following rain related impacts in the March Q. The mid-tiers continue to trade on premium metrics vs our NAV despite little or no production growth forecasts in FY19-20. We continue to believe the smaller producers and emerging miners offer value and upside against their mid-tier peer group having been left behind in the recent surge in top end valuations.
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