Stephen Gorenstein: Gold still shines for this high performing resources stock picker

Melbourne-based mining fundie Stephen Gorenstein remains bullish on gold even at record prices, with big money to flow into gold miners.

Stephen Gorenstein thinks gold miners continue to be a good place to allocate cash. Pic: Supplied/Stockhead

A veteran analyst, Stephen Gorenstein’s deep mining experience has underpinned his work at the helm of the Melbourne-based Ari Fund.

Now, he’s sharing his expertise with Stockhead readers to shine a light on where value can be found in ASX resources.

Gold's run past US$3000/oz will no doubt raise fears the trade has run past investors and moved into overbought territory.

But investors who have long backed the yellow metal remain confident in its fundamentals, saying the generalist money is not yet piling into gold equities in the manner you might expect of a bull market.

"The more I look at the market, the more gold looks attractive is the truth," Ari Fund portfolio manager Stephen Gorenstein says.

"If I look at the market today, where do you want to invest? And it's very hard to go past gold right now.

"There's a lot of reasons for that and they won't surprise you. It's everyone's favourite commodity now but there is good reason: you've got central bank buying continuing, you've got the safe haven status and you've got the interest rate cycle.

"There's three really positive signals. Despite the fact that everyone is positive gold, which is usually a major concern, I still think the generalists are probably underweight, and if that's the case there might be small blips in the gold price.

"But I think it continues to move up over the course of the year."

Standout pick

The bulk of the top names in the Ari Fund in recent times have been gold miners, an area of the market the Gorenstein knows well after stints on the sell-side at Goldman Sachs and Bank of America and in BD for Newcrest and St Barbara.

Ari holds positions also in copper stocks, while Gorenstein said falling prices has made the uranium sector look attractive again.

But gold stocks continue to take the limelight in its portfolio.

Gorenstein's standout pick is Ramelius Resources (ASX:RMS), which finally delivered on a long-mooted rumour to make a takeover play for Dalgaranga gold project owner Spartan Resources (ASX:SPR), which will create a $4.2 billion mid-tier gold miner with a line of sight to 500,000oz of production per annum in WA from 2030.

"Their recent tie up with Spartan really does make perfect sense. It removes an uncertainty what is Ramelius going to do," he said.

"It removes the production gap and uncertainty ... and increases optionality for then combined group and in our view it actually creates the leading low cost mid tier producer. It's got really strong margins and now with Spartan it's also got a lot of growth and flexibility, so we think it's undervalued, we think that's going to be a really strong story for 2025."

Gorenstein is also more positive than the market on RMS' recently delivered long-term mine plan for its Mt Magnet plant and deposits, which resulted in a ~20% share price collapse a fornight back.

"So they've gone from seven years to 17 years of life. That's not a negative. You know, people were treating it as if they missed a production target, they didn't miss a production target. They put out a very long term mine life, which we see as positive in the longer term," he said.

Read: Amid record gold prices, this $2.4bn gold deal is unlikely to be the last

More golden boys

It's not only Ramelius on Gorenstein's conviction list.

He's bullish about a number of West African gold explorers, notably Predictive Discovery (ASX:PDI), which has emerged a three-cornered M&A target between the predatory triumvirate of Lundin, Zijin and Perseus Mining (ASX:PRU).

PDI discovered the 5.4Moz Bankan deposit in Guinea, which could become one of Africa's largest gold mines.

"It really is a high quality project and it obviously creates a potential bidding war over the next 12 months. We're looking to see their exploitation permit come through in the next few months and we think that will be another catalyst for them, because that actually moves them into that development," Gorenstein said.

The other West African explorer Ari watches closely is Many Peaks Minerals (ASX:MPK),  which raised +$6m at a premium last week to pick up the pace of exploration after an intercept of 45m at 8.58g/t gold from 104m at the Ferké project turned heads.

Gorenstein said the strike showed it had "significantly more grade" than previously revealed to the market.

"They followed that with a placement which was handled very, very well, and you had directors and chairman take on a significant portion of that placement, which really is welcome from shareholders," he said.

"Now they've got more than enough cash to continue the news flow. All that money is going to drilling which is positive. Market cap of 48 million bucks. I still think that there's lot of growth there."

The other question is what's next for West African M&A after PDI.

"One that sticks out to us is Turaco Gold (ASX:TCG)," Gorenstein said.

"That's a large resource base, it's growing and there's not a lot to poke at that looks off on that, so we think that's got potential."

$300 million capped Turaco, up 37% YTD, has 2.5Moz in resources with a resource update due in April and is led by Justin Tremain, who previously led Exore Resources and Renaissance Minerals before their respective sales to now multi-billion dollar gold miners Perseus and Emerald Resources (ASX:EMR).

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.

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At Stockhead, we tell it like it is. While Spartan Resources and Many Peaks Minerals are Stockhead advertisers, they did not sponsor this article.

Originally published as Stephen Gorenstein: Gold still shines for this high performing resources stock picker