This report is an updated version of the report published on 21 October 2024 at 4:20 PM AEDT.

Gold Road Resources Ltd (ASX: GOR)

Gold Road Resources Limited (ASX: GOR) is an Australian company engaged in gold exploration and production activities. Its Tier 1 mine and exploration projects cover over 14,000 square kilometres across Western Australia, South Australia, and Queensland. The company owns 50% of the Gruyere gold mine.

Recommendation Rationale - SELL at AUD 1.970

• Trading Near the Resistance: GOR’s share price has surpassed its R1 level recommended on 30 September 2024. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow) are higher than the median of Basic Materials’ sector.
• Technical Standpoint: With a 14-day RSI of ~79.66, Perseus Mining's stock is in the overbought territory. Thus, the stock price might be overbought and could be due for a price correction or consolidation.
• Reduced Revenue and Production: Gold sales revenue decreased to AU$211.7 million in the first half of 2024, down from AU$229.0 million in H1 FY23. Similarly, gold sales dropped to 63,542 ounces from 80,115 ounces due to production disruptions caused by a prolonged regional rain event​.
• Lower Dividend: The interim dividend was reduced to 0.5 cents per share in H1 FY24, down from 1.2 cents per share in the previous year, reflecting lower profitability​

GOR Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY Dec'25E) (Illustrative)

GOR is expected to trade at a slight premium based on debt-free balance sheet, exploration success, and rising gold prices. For conducting the valuation, the following peers have been considered: Ramelius Resources Ltd (ASX: RMS), Alkane Resources Ltd (ASX: ALK), and Westgold Resources Ltd (ASX: WGX).

Considering that the stock has surpassed its R1 level, market uncertainties, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 1.970, as of 21 October 2024, at 2:49 PM AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 21 October 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.