Citigroup expects global gold stocks' 1Q26 production to be seasonally weak, but rising gold prices continue to support earnings momentum

Overview

This is a Citigroup global gold sector 1Q26 preview report covering Anglogold Ashanti and Gold Fields. The report suggests that both companies' first-quarter production may be seasonally weaker compared to the previous quarter, but rising gold prices will continue to drive earnings momentum, and their balance sheets are also expected to further improve. The report focuses on FY26 cost guidance, dividends, project progress, and future production growth paths.

Core views

The core view is that, in an environment of rising gold prices, large publicly listed gold mining companies are rare, and both Anglogold Ashanti and Gold Fields are expected to benefit. Anglogold's earnings improvement comes from higher gold prices, Sukari's incremental production, and Nevada's long-term expansion potential; Gold Fields' advantage lies in its assets spanning Australia, Africa, and the Americas, providing more diversified geographic risk, and having Salares Norte, Windfall, and Gold Road Resources driving future production growth. In the short term, the weaker-than-expected 1Q26 production for both companies does not change the buy logic.

Analysis framework

The report adopts a method combining performance and production previews with valuation frameworks: first comparing 1Q26 expectations with the previous quarter, the same period last year, and Visible Alpha consensus, then cross-validating target prices using DCF-based NPV and EV/EBITDA valuations. For investment ratings, Citigroup incorporates 12-month expected stock price returns, dividend yields, and risk factors into its total return forecasts.

Methodology notes

• Valuation methodsDCF-based NPV

  Discounted Cash Flow Net Present Value

  Citigroup uses DCF-based NPV based on long-term real equilibrium commodity prices to value gold mining assets, and applies a 5% WACC to gold mining operations.

• Valuation methodsEV/EBITDA

  Enterprise Value-to-EBITDA Valuation

  The report uses an 8.0x multiple of 1-year forward EBITDA for EV/EBITDA valuation and takes the average with DCF-based NPV to form the basis for target prices.

• ratingCiti Expected Total Return

  Expected Total Return

  In Citigroup's rating system, expected total return equals the 12-month expected stock price appreciation plus dividend yield; a buy typically corresponds to an expected total return of 15% or more, with a high-risk stock threshold of 25% or more.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Anglogold Ashanti PLC / AU.US / ANGJ.J

  Core covered company, given a buy rating by Citigroup

  Strengths

  Benefits from rising gold prices, Sukari's incremental production, Nevada's long-term expansion, and Obuasi's ramp-up; balance sheet expected to further improve; scarcity of large publicly listed gold mining companies provides valuation support.

  Weaknesses

  First-quarter production is usually weaker, currently about 65% of production and about 75% of NAV come from Africa, with relatively higher jurisdictional risks; some mines have shorter reserve life spans.

  Comparison

  The company accounts for about 2% of global gold production, while the top ten gold producers together account for about 28%; it has relative attractiveness in an environment of scarce large publicly listed gold mining companies.

  Risks

  Falling gold prices, labor relations, capital expenditure overruns at Nevada and Obuasi, depletion of reserves, African regulatory risks, North Bullfrog permit delays, further delays in Obuasi Phase 3, and AISC exceeding expectations.

• Gold Fields Ltd / GFI.US / GFIJ.J

  Core covered company, given a buy rating by Citigroup

  Strengths

  Assets span Australia, Africa, and the Americas, providing more diversified geographic risk; Salares Norte, Windfall projects, and the acquisition of Gold Road Resources are expected to drive production growth in 2026 by about 25% compared to 2024, and by about 30% by 2029; incremental production costs are expected to be lower.

  Weaknesses

  1Q26 production is expected to decline quarter-on-quarter, and AISC is expected to rise quarter-on-quarter; Windfall is still in development and environmental approval processes, and details on project economics need to wait for updates.

  Comparison

  The company accounts for about 2% of global gold production, and while it has production growth over the next five years, it remains relatively undervalued compared to global peers; Citigroup believes it should receive higher valuation multiples.

  Risks

  Falling gold prices, labor relations, Windfall's capital expenditures or costs exceeding expectations, significant gold price drops leading to persistently high net debt, delays in Salares Norte ramp-up, and regulatory risks from about 45% of production coming from Africa.

Key data

• Anglogold Ashanti 1Q26E EBITDAUS$2.213bnUp 121% year-on-year, up 22% quarter-on-quarter; Visible Alpha consensus was US$2.183bn.
• Anglogold Ashanti 1Q26E Adj EBITDAUS$2.470bnUp 120% year-on-year, up 14% quarter-on-quarter.
• Anglogold Ashanti 1Q26E HEPSUS$2.4/shareUp 169% year-on-year, up 26% quarter-on-quarter; Visible Alpha consensus was US$2.5/share.
• Anglogold Ashanti 1Q26E DPSUS$1.1/shareCitigroup expects dividends to be around 0.5 times the payout ratio, broadly in line with the company's dividend policy.
• Anglogold Ashanti 1Q26E net debt-US$942mNet debt is negative, indicating the balance sheet is expected to further strengthen.
• Gold Fields 1Q26E attributable production624kozUp 13% year-on-year, down 8% quarter-on-quarter, below the Visible Alpha consensus of 638koz.
• Gold Fields 1Q26E gold produced640kozUp 12% year-on-year, down 9% quarter-on-quarter; Visible Alpha consensus was 655koz.
• Gold Fields 1Q26E AISC$1,857/ozUp 16% year-on-year, up 13% quarter-on-quarter, consistent with the company's guidance.
• Anglogold Ashanti target price$120/share; ZAR1,950/shareBased on the average of DCF-based NPV and EV/EBITDA valuations.
• Gold Fields target price$65/share; ZAR1,100/shareBased on the average of DCF-based NPV and EV/EBITDA valuations.

Impact & implications

The investment implication of the report is that the short-term weakness in first-quarter production is more like a seasonal disturbance rather than a fundamental turning point; against the backdrop of rising gold prices, project ramp-ups, and the scarcity of large publicly listed gold mining companies, both companies still have room for improvement in earnings and free cash flow. If FY26 cost guidance remains manageable and project progress goes smoothly, the market may continue to assign higher valuation multiples; conversely, higher energy costs, capital expenditure overruns, or project delays could weigh on target prices and NPVs.

Risks

• Unfavorable movements in gold prices will directly affect revenue, profit margins, valuations, and target prices.
• Labor disputes can impact production and costs, which is a common risk in the mining industry.
• If projects such as Nevada, Obuasi, Windfall, and Salares Norte experience capital expenditure overruns, cost overruns, or construction approval delays, they will weaken NPVs and target prices.
• Rising energy costs and AISC exceeding expectations could offset the earnings improvement from rising gold prices.
• A relatively high proportion of production from Africa exposes both companies to relatively higher regulatory and jurisdictional risks.
• If gold prices drop significantly, Gold Fields could face higher and longer-lasting pressure on net debt.

What to watch

• Anglogold Ashanti's 1Q26 earnings release and whether EBITDA approaches the expected US$2.213bn.
• Gold Fields' 1Q26 production—whether it approaches the expected 624koz attributable production—and whether AISC rises to around $1,857/oz as guided.
• FY26 cost guidance, especially the impact of rising energy costs after Middle East disruptions on mining companies' cost curves.
• Anglogold Ashanti's dividend level—whether it approaches US$1.1/share—and how well its dividend policy is implemented.
• Anglogold Ashanti's Nevada project, North Bullfrog permit progress, and Obuasi Phase 3 ramp-up.
• Gold Fields' Salares Norte ramp-up, Windfall project's environmental approvals, and updates on project economics.
• Gold price trends and their transmission to EBITDA, free cash flow, net debt, and valuation multiples.