ASX 200 gold shares have struggled to outperform the market this year after an astonishing run in 2020.
Gold staged a rally into record territory between May 2019 and August 2020, where prices surged from US$1,300 to above US$2,050.
More recently, it's been a frustrating time to be bullish on gold with spot prices grinding back and forth below US$1,900. While ASX200 gold shares might be making production and operational headway, gold prices have kept valuations at bay.
Morgans has undergone a review of ASX gold stocks under coverage, with a number of plays emerging as a buy.
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Regis Resources Limited (ASX: RRL)
Regis holds a dominant position in the Duketon Greenstone Belt in the North Eastern Goldfields of Western Australia, with a number of open pits and underground projects in the area.
The company is also progressing its McPhillamys Gold Project in the Central Western region of New South Wales, a robust large-scale open-pit gold mine within a highly prospective land package.
More recently, the company signed a conditional binding agreement with IGO Ltd (ASX: IGO) to acquire its 30% interest in the Tropicana Gold Project for A$903 million. Tropicana represents a low cost, high margin and top five producing Australian open-pit and underground gold mine opportunity to build on Regis' existing production base.
Morgans believes it may take time to realise the value of Tropicana but likes the company's long-term outlook. The broker retains an add rating with an ambitious $4.08 target price.
Like most ASX gold shares, the Regis share price has been pushed lower thanks to weak gold prices. Its shares are currently down 30% year-to-date to $2.56.
Ramelius Resources Limited (ASX: RMS)
Ramelius is a mid-tier gold producer, currently operating the Mt Magnet, Vivien, Edna May and Marda gold mines around Western Australia. The company has a strong track record of growing gold production with an average year-on-year increase of 21.5% since FY15.
Morgans highlights a number of positive catalysts for the company, including near-term mine life extensions for its Edna May and Eridanus projects. An add rating was retained with a $2.24 target price.
The production and cost management of Ramelius has helped its shares stay relatively buoyant compared to most ASX gold shares. Its shares edged only 3% lower year-to-date, current trading at $1.73.
Red 5 Limited (ASX: RED)
In 2017, Red 5 acquired the Darlot and King of the Hills gold projects in Western Australia. This marked the beginning of the company's growth chapter, with production across the two operations ramping up to more than 100,000 ounces per annum.
Morgans flags the company's recent disappointing production out of Darlot but points to the King of the Hills project as a key value driver for the company.
The broker believes there could be more challenges with near-term production but reiterates the long-term potential of the small-cap gold miner. An add rating was retained with a 31 cent target price.
The production miss combined with weak gold prices has pushed the Red 5 share price to a one-year low of 19 cents.
