UBS has issued a mixed assessment of major Australian gold miners, raising its rating for Newmont while downgrading Northern Star Resources and Evolution Mining. This shift occurs amid the sector grappling with production delays and escalating capital costs, despite rising gold prices.
### Newmont Upgraded
UBS has increased its price target for Newmont by 17% to A$105, while retaining a “Buy” rating, making it a preferred choice among large-cap Australian gold stocks. This upgrade is attributed to Newmont’s recent operational improvements following several challenging years marked by mergers and production issues. The firm is projected to produce 5.6 million ounces of gold in 2025, with an anticipated 8% free cash flow yield for 2026. Furthermore, Newmont has made significant commitments, including US$1.3 billion in development capital, while keeping net debt manageable below US$5 billion, positioning it well for shareholder returns.
| Ticker | Company | Rating (old) | Rating (new) | Target (old) | Target (new) |
|——–|——————-|————–|—————|————–|—————|
| NEM | Newmont | Buy | Buy | $90 | $105 |
| NST | Northern Star | Buy | Neutral | $25.80 | $23.00 |
| EVN | Evolution Mining | Neutral | Sell | $8.00 | $6.70 |
### Northern Star’s Setbacks
The downgrade of Northern Star reflects concerns about its production timeline, with UBS now expecting the mining company to reach only 1.8 million ounces by fiscal 2026, which is a 12-month delay from its previous target of 2 million ounces. Persistent productivity issues in the Kalgoorlie Super Pit and delays in permit approvals for the Hemi project have compounded these challenges, leading to a 6% reduction in earnings forecasts for both 2026 and 2027. While Northern Star’s balance sheet remains strong, there is a pressing need to rebuild confidence in its growth strategy.
### Evolution Mining’s Valuation Concerns
Despite boasting an 81% year-to-date increase in share price, Evolution Mining has been downgraded to a “Sell” rating due to stretched valuations and rising capital expenditure (CapEx). UBS has revised its five-year average CapEx forecast to A$916 million annually, nearing the upper limits of the company’s guidance and hinting at potential cost pressures. Additionally, production forecasts have been reduced by 5% following downgrades in resource grades at significant assets like Red Lake. UBS concluded that Evolution Mining’s stock now lacks sufficient valuation support at its current price levels.
### Future Outlook for the Sector
The downgrades signal broader challenges for Australian gold miners as they confront heightened operational costs and regulatory delays while striving to meet ambitious growth expectations. While gold prices remain buoyant, effective operational execution is crucial for sustaining investor confidence. The recent reshuffling of ratings by UBS indicates that the time of easy gains from escalating gold prices may be dwindling, with significant company-specific performance now being a key driver of share price movements.
The forthcoming guidance updates, particularly from Northern Star following a site visit scheduled for early August, will be pivotal. They will serve as critical indicators to assess whether these companies can fulfill their growth promises or potentially undergo further negative revisions from increasingly discerning analysts.
As the gold mining landscape evolves, close attention to operational performance and strategic execution will ultimately determine the trajectories of these companies in a competitive and economically sensitive environment.
