Buy this ASX 200 gold stock for a 25% return in 2024

This miner's shares could have a golden year according to Bell Potter.

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If you're wanting some gold exposure in your portfolio, then Regis Resources Ltd (ASX: RRL) shares could be the way to do it.

That's the view of analysts at Bell Potter, which have responded positively to some news from the ASX 200 gold stock this week.

What is the broker saying about this ASX 200 gold stock?

Bell Potter notes that Regis Resources has closed its gold hedge book for a cost of A$98 million.

This comprises the buyback of 63,000 ounces of forward sold at a gold price of A$1,571 per ounce for delivery over the balance of FY 2024. This means that all sales are now exposed to spot gold prices.

Commenting on the closure, the broker said:

While this move has been signalled to the market, its implementation is a significant milestone for the company and results in forecast earnings upgrades for FY24, offset by the expense of the closure, which we record above the EBITDA line. We calculate a net closure price of ~A$3,120/oz, with the implication being that if the A$ gold price is above that level through FY24, RRL will come out ahead of its $98m outlay.

But that's not necessarily the best part. Bell Potter adds:

More important, however, is RRL's operating margin expansion, its appeal to investors seeking unhedged gold exposure in a rising gold price environment and the increase in quarterly cash flow generation metrics that the market gives a strong weighting to in its valuation of gold producers.

Big returns ahead

Bell Potter believes that this ASX 200 gold stock could generate big returns for investors over the next 12 months.

According to the note, it has retained its buy rating with an improved price target of $2.37. This implies a potential upside of approximately 25% for investors from current levels.

The broker concludes:

RRL is one of the largest ASX gold producers with an attractive all-Australian asset portfolio and organic growth options which are unique at this scale. It now offers full exposure to the gold price and strong free cash flow growth over FY24 and FY25. These attributes also make RRL an appealing corporate target in the current M&A environment.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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