Lim & Tan Securities Research Report March 20, 2025
Riding the Gold Boom: CNMC Goldmine’s Soaring Potential
CNMC Goldmine: Capitalizing on Record Gold Prices
CNMC Goldmine (S$0.335, up 0.5 cts) remains a prime beneficiary of rising gold prices amidst global uncertainties and increasing demand for the safe-haven asset. The company is poised to ramp up production this year through expanding its carbon-in-leach (CIL) plant by 60% to increase processing capacity, and building a second underground gold mining facility to extract higher-grade gold ores.
Higher production will allow CNMC to capitalize on rising gold prices, which are forecasted to remain strong in 2025. FY24 results came within expectations, with revenue rising 25% year-over-year to US$65.2 million and net profit increasing 140% to US$9.8 million – its best performance since FY15.
Gold Prices Soar to New Heights
Gold is a standout performer, rising 26% in 2024 and another 16% in the first three months of 2025. Average gold prices have risen from US$1,960 per ounce in 2023 to US$2,455 per ounce in 2024, before reaching an all-time-high of US$3,050 per ounce as of March 20, 2025. Factors driving gold’s positive performance include central bank purchases, geopolitical tensions, interest rate cuts, and its role as a hedge against inflation.
Analysts believe gold prices could remain elevated for the rest of the year, with Goldman Sachs forecasting US$3,100 per ounce by the end of 2025 and JP Morgan projecting US$3,150 per ounce. The Trump government’s aggressive and unpredictable trade policies are seen as a key driver for gold in 2025, and as a gold-mining company selling at the spot rate, CNMC is a direct beneficiary of rising prices.
CNMC’s Expansion Plans to Capitalize on Gold Boom
To take full advantage of the surge in gold prices, CNMC is forging ahead with plans to ramp up production at its Sokor Gold Field. The company will be expanding its CIL plant by 60% in the first half of 2025 and constructing a second underground gold mining facility to be ready by the second half of the year.
The upgraded CIL plant will come with a dual operating system to ensure uninterrupted production, eliminating downtime and preventing disruptions experienced in the past due to maintenance and repair work. CNMC’s CEO, Mr. Chris Lim, stated: “We are going full steam ahead to scale up production as we want to take full advantage of the run-up in gold prices.”
Financial Outlook and Valuation
CNMC is set to sustain its growth trajectory through higher gold prices and increased production of gold ore and base metals. Backed by a net cash position of US$17.9 million (18% of market cap), the company’s earnings are forecasted to grow 21% in FY25 and 6% in FY26, translating into a 5.1% forward dividend yield based on an unchanged 43% payout ratio.
Despite its smaller size compared to peers, CNMC’s gold resources (Measured, Indicated & Inferred) remain plentiful to last the next 20-30 years at least, based on the current production rate. The company’s price-to-book ratio is in line with peers, but it possesses a superior return on equity and dividend yield. Valuations are at a significant discount to peers, rendering CNMC an attractive counter to consider at the current price levels of S$0.335, trading at 8.5x forward P/E and 2.1x P/B.
Conclusion: CNMC’s Golden Opportunity
With sky-high gold prices and an increase in gold output as targeted by the company, 2025 is set to be a year to watch for CNMC Goldmine. The company’s expansion plans, strong financial position, and attractive valuation make it a compelling investment opportunity to capitalize on the ongoing gold boom.
