The ASX Gold Sector is full of Surprises

 The Hotspots

Undervalued local: Which gold producer owns the second largest gold resource in Australia and is unhedged, debt free, and costs just $30/oz? (That's about 10% of the cost per ounce of the largest Australian resource.)

Unnoticed giant: The second largest Australian owned resource overseas is just $6/oz. It's 10 million ounces of gold inside a HUGE platinum resource. Ignore the platinum. The rights to the gold byproduct are one of the cheapest on the ASX! And it's in a first world country.

Paper Kings: Which two ASX gold companies have made such successful investments that the shares they own are worth more than their entire market cap. At the moment if you buy a share in these companies you get an asset that on paper is worth more than what you pay.

The Traps

Overpriced Resources: Some investors are paying more than $600 per resource ounce in one Australian dedicated gold corporation. Others are paying just $2/oz for a West Australian resource.

Extra High Risk Explorers: There are 6 dedicated gold explorers that investors are paying over $400/oz for. To put that in perspective, the average cost of gold held by a producer is around $150/oz. These explorers have to double their resources, and pay millions for mine development just to keep their share price level and with a value on par with the average producer. Some of these are well known companies. Do their investors realise they are holding shares that have so little upside?

Old Gold favourites with no gold? Some well know gold miners (two are still listed on the ASX Gold Index) have found iron ore or zinc instead of gold. They're profitable, but they're not a gold investment anymore. They have next-to-no exposure to the gold price. One well known gold explorer in South East Asia has a large gold deposit, but 85% of it's future income is likely to be from copper instead.

Hedged to the hilt? One ASX Gold miner has hedge commitments that are ten times larger than it's whole market capitalisation.

 What's EV?

These prices per ounce are all EV/oz figures. EV (Enterprize Value) is like market cap, but more accurate, since it takes cash and debt into consideration. EV is calculated thus: EV = Market Cap - Cash + Debt.