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Gold miner Serabi Gold‘s (LSE:SRB) impressive share price momentum continues, despite a slight pullback in precious metal prices from April’s peaks.
Mining stocks can be a high-risk bet for investors. Digging for metals is a complicated and unpredictable business, and problems are commonplace during each of the exploration, project development and production phases.
These can have significant implications for miners’ share prices. Yet when operational performances impress, the opposite can also be true. This is what’s just swept Serabi shares to their highest in more than a decade, at 199p.
Operational excellence
On 17 July, the business said gold production totalled 10,532 ounces in Q2, up 17% year on year.
With 2025 output now at 20,545 ounces, Serabi remains on track to hit its target of 44,000 to 47,000 ounces. To put the cherry on top, the business enjoyed grade improvements at both the Palito and Coringa assets in that time.
These steady operational improvements are fuelling optimism that the gold stock will hit its ambitious production growth targets in the coming years.
Boosted by ramp-ups at the new Coringa mine, the firm hopes to produce 60,000 ounces of the yellow metal in 2026; between 70,000-75,000 ounces the following year; and as much as 100,000 ounces in 2028.
It’s also worth mentioning that Serabi’s higher ore grades and operational efficiencies mean costs are well below the current gold price of $3,427. Its all-in-sustaining costs (AISC) were $1,636 per ounce, according to latest data.
Serabi expects this to decline to between $1,300 and $1,360 per ounce as production at low-cost Coringa increases.
Bright gold price outlook
Of course, all this could count for little if the price of gold suddenly collapses.
The precious metal’s up 42% over the last 12 months, and 92% over the past three. But there’s no guarantee that they will continue rising, — in fact they could drop if inflationary pressures diminish, growth picks up and current geopolitical tensions recede.
Gold’s rapid rise could also work against it if concerns about the safe-haven asset being overbought take hold.
Yet on balance, I feel the turbulent macroeconomic landscape and worsening geopolitical picture will continue powering gold higher. It could also benefit from further US dollar weakness, which boosts all commodities priced in the currency.
Too cheap to ignore
Reflecting this outlook and Serabi’s planned production hikes, City analysts expect company earnings to surge 87% in 2025, and by another 5% next year.
As a consequence, the AIM company’s (in my view) one of the most attractively priced gold stocks on the market. Its price-to-earnings (P/E) ratio sits at 3.6 times and 3.5 times for 2025 and 2026, respectively.
Furthermore, its price-to-earnings growth (PEG) reading sits well below the value watermark of 1 for both years.
Like any gold stock, Serabi shares aren’t without risk. But given its bright outlook and excellent value, I think it’s worth a very close look right now.
