Author argues ASX gold producers Westgold (WGX) and Vault Minerals (VAU) are cheap on forward EV/EBITDA and FCF yield, offering diversification from AI and US tech with upside if gold stays elevated.
WGX.AX — LONG The author argues Westgold Resources trades at a low single-digit forward EV/EBITDA of 3.8 and a forward FCF yield above 7% assuming a $4,500/oz gold price, with a positive net cash balance of $300m. The author believes elevated gold prices are here to stay and sees serious upside if gold continues to appreciate, while providing diversification from AI and US tech stocks. The main risk is the dependence on the assumed gold price and production estimates.
Sharing two ASX gold producers (tickers WGX and VAU) with low single digit ev / forward ebitda, positive net cash balance, forward free cash flow yield above 7%, operating margins at mid double digits and how I come up with the estimates assuming 4500$ oz gold price.
VAU.AX — LONG The author argues Vault Minerals trades at a forward EV/EBITDA of 3.4 and a forward FCF yield around 7% assuming a $4,500/oz gold price, with a positive net cash balance of $470m. The author believes elevated gold prices are here to stay and sees serious upside if gold continues to appreciate, while providing diversification from AI and US tech stocks. The main risk is the dependence on the assumed gold price and production estimates.
Vault minerals (VAU)
most operations in Australia, one mine in Canadamarket cap
3.9bn usd
net cash +470m usdoutput 2027 375000 oz
aisc 2027 2650usd
ebitda 2027 \~700m usd
ev/ebitda 2027 3.4
expect fcf 2027 around 280m usd, so forward fcf yield around 7%