HMY vs. AU: Which Gold Mining Stock is the Better Pick Now?

Core Viewpoint - Harmony Gold Mining Co. Ltd. and AngloGold Ashanti plc are benefiting from the surge in gold prices driven by investor demand for safe-haven assets amid global economic uncertainties, with current prices hovering above $3,300 per ounce [1][2][3] Group 1: Company Overview - Harmony is South Africa's largest gold producer, with production of approximately 1.56 million ounces in fiscal 2024 and a diverse portfolio of projects in South Africa and Papua New Guinea [4] - AngloGold Ashanti has executed a strategy of organic and inorganic growth, acquiring Centamin in November 2024, which adds a significant Tier 1 asset to its portfolio, increasing its mineral reserves to 31.2 million ounces [10][12] Group 2: Project Developments - Harmony's Wafi-Golpu project is expected to be transformative, with an estimated gold reserve of 13 million ounces, currently in negotiations for a Mining Development Contract [5] - The Eva Copper project in Australia, acquired in 2022, is expected to produce 55,000-60,000 tons of copper annually and has received conditional funding from the Queensland government [6] Group 3: Financial Performance - Harmony's net cash increased by approximately 53% to $592 million at the end of Q3 fiscal 2025, allowing for financing of development projects [7] - AngloGold Ashanti's free cash flow surged to $403 million in Q1 2025, with adjusted net debt reduced to $525 million and liquidity of $3 billion [13] Group 4: Dividend Policies - Harmony has a dividend policy to pay 20% of net free cash generated, with a current yield of 1.2% and a five-year annualized growth rate of about 7.3% [8] - AngloGold Ashanti aims to return 50% of its annual free cash flow, offering a dividend yield of 3.1% and a five-year annualized growth rate of approximately 32.1% [14] Group 5: Cost Structure and Challenges - Harmony faces higher costs, with a 24% increase in all-in-sustaining costs and a 22% rise in total cash costs year-over-year, primarily due to labor and electricity expenses [9] - AngloGold Ashanti is focusing on improving mining volumes and cost efficiencies at its key projects, including Obuasi and Siguiri [11][12] Group 6: Stock Performance and Valuation - Year-to-date, Harmony's stock has increased by 76%, while AngloGold Ashanti's stock has risen by 86.7%, outperforming the Zacks Mining - Gold industry's increase of 47.5% [15] - Harmony trades at a forward earnings multiple of 7.61, representing a 45% discount to the industry average, while AngloGold Ashanti trades at a multiple of 9.73 [17][19] Group 7: Earnings Projections - The Zacks Consensus Estimate for Harmony's 2025 EPS implies a year-over-year rise of 10.2%, while AngloGold Ashanti's estimate suggests a growth of 95% [21][22] Group 8: Investment Recommendation - Both companies are well-positioned to capitalize on the current gold price environment, but AngloGold Ashanti appears to have an edge due to its higher dividend yield, healthier growth rate, and better earnings growth projections [23]