Macquarie-ASX Gold Sector Outlook Post-reporting season positioning-20250901

• Switching our large-cap preference from NEM to NST: NST(Outperform) becomes our preferred large-cap gold stock followed byNEM (downgrade to Neutral) and then EVN (Underperform). NEM saw a25% share-price lift since late-June 2025, while NST has remained flat.NEM was previously our top pick as we expected a tumultuous guidanceseason for NST and strong production performances from NEM, andthis came to fruition. Since then NST's site visit to KCGM yielded littlenegative news. The next NST key data point (aside from Qtly reports)will be the approvals and updated study for Hemi (first half of CY26).Hence, we now see 'clear air' for NST over the next 6 months or so, whichshould give the stock a chance to positively re-rate. For NEM, while it isincreasingly likely that CY25 guidance is exceeded, we believe this is nowpriced in. EVN, while it has been a constant performer, appears the leastattractive on a range of metrics.

• GMD and VAU; the top mid-cap picks: GMD our top mid-cap pick witha five-year growth outlook exceeded only by CMM. GMD upgraded FY26guidance which followed a beat to upgraded FY25 guidance. We assumethe company will embark on a region-wide expansion project which wefirst outlined in our note titled 'The milling dollar question' (May 2025).GMD is planning on releasing a new long-term outlook in 2HFY26. VAUhas underperformed peers on a 1-year basis (Figure 3) due to: i) elevatedOTM hedges with rising gold prices, ii) a re-cut of KOTH reserves (gradedown materially) and, iii) a relatively capital intensive plan to expandKOTH processing plant. Following this re-set of expectations, we seeVAU as a CFPS growth stock going from 8% FCF yield in FY26 to ~11%by FY28, largely driven by a roll-off in capex, while the company's (OTM)hedge exposure also materially reduces from 122koz at A$2,882/oz (spot~A$5,300/oz) in FY26 to just 10koz at A$2,797/oz.

• Reporting season highlights: In aggregate, reporting season wasreasonably uneventful given most had already given guidance andoperational data in the June quarterly period. However, some highlightsincluded: i) VAU announced CEO succession and an "up to 10% of OS"buyback. Share price up 12% on the day; ii) WGX 3cps final dividend(78% payout). "Up to 5%" share buyback announced. Min dividend policydoubled (now 2cps); iii) GMD FY26 production guidance higher thanexpected offset by higher AISC and growth capex (pulled forward for millexpansions); iv) GGP first look at earnings since buying Telfer/Havieron;v) RRL announced fully franked A5¢/sh dividend, which was 75% aboveVA at the time. However, a lack of dividend policy, in our view seemedto scare investors with the stock down 8% on the day. RRL has sincerecovered to be up 8% above its pre-report close.