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Top 5 best Australian gold mining stocks

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With the spot price for gold up nearly 50 percent over the past year, you’d think Australian gold mining stocks would be performing just as well. In fact, they should be doing better thanks to relatively fixed mining costs. As the price of gold move up in value, the profit margins for gold mining stocks are compounded.

Case in point: when UBS recently upped its estimates for gold prices in 2012 from $1,380 an ounce to $2,075 an ounce, they also upped profit expectations for Australia’s gold darling Newcrest Mining Limited (ASX:NCM) by 72 percent (per SMH).

UBS also named their five favorite Australian gold mining stocks (with Newcrest among them). Here’s my take on each of their picks:

1) Newcrest Mining Limited (ASX:NCM) Newcrest Mining is Australia’s biggest gold producer. The company recently reported a 63 percent surge in net profits for the fiscal year (per FNN). Late last fall, Newcrest took over Lihir Gold in a AUD$9.5 billion deal that’s panning out nicely on higher gold prices.

In addition to the Lihir deal, the company’s partnership with South African gold producer Harmony Gold Mining Co. (NYSE:HMY) could yield a $6-$8 billion mine in Papua New Guinea. A pre-feasibility study on the Wafi-Golpu gold-copper mine is expected to wrap up early next year and full-scale mining could begin as early as fiscal 2017. -1.4 percent YTD

2) Perseus Mining Limited (ASX:PRU). One of a few Australian junior mining companies that’s making strides toward mid-tier status, Perseus is rumored to be shopping for acquisitions. Perseus was named as a potential suitor to take over Teranga Gold Corp. (ASX:TGZ) (per The Australian). The rumors come on the heels of the company’s success bringing the Central Ashanti gold project in Ghana online late last month. +19.2 percent YTD

3) Adamus Resources Limited (ASX:ADU). Like Perseus, Adamus has pinned a lot of its future on projects in Ghana. Adamus didn’t pour its first gold until January of this year, but company could soon be producing as much as 100,000 ounces of gold a year from its Nzema Gold Project. They’ve now set their sites on landing additional projects and interests in Liberia. -4.3 percent YTD

4) AusQuest Limited (ASX:AQD). With its stock trading around 10 cents a share, it may take some time for AusQuest to pan out, but the company has a wide range of interest. All told they’re exploring 11 projects in Australia and Africa. Right now, most of their efforts are focused in the country of Burkina Faso, which lies just north of Ghana. Early studies at the Camoe Joint Venture show potential for as much as 7.75 grams of gold per ton at a depth of just 8 meters. That’s excellent as a good mine could yield as little as 2 grams of gold per ton and still be quite profitable (at shallow depths). -21.4 percent YTD

5) Bassari Resources Ltd. (ASX:BSR). The cheapest of the Australian gold stocks on the list, Bassari’s trading at just shy of .08 cents per share. The company’s focused on exploration at its Makabingui Project in Senegal. Initial assays are promising with a hole at 7 meters yielding 54.3 grams of gold per ton. The company believes the project will eventually produce at least 240,000 ounces of gold. -57.2 percent YTD

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