Indonesia gold miners poised for rerating; exploration success, new capacity, and IPO momentum drive multi-year growth outlook

Gold entered 2H25 with a historical price rally, posting a new all-time high of ~USD4,000/oz in Oct 2025, which has reignited investor appetite for Indonesia's listed gold miners. Our total shareholder return (TSR) analysis suggests the Indonesia gold sector offers an attractive 45% average TSR for FY26F attributed to earnings growth. We forecast the sector to deliver a 31% average production CAGR, translating to a 45% earnings CAGR over FY26-29F (Fig. 2 and Fig. 3). The recent IPO success of Merdeka Gold Resources (EMAS IJ, Buy) – valued at approximately USD377/oz (at IPO price) – further underpins the sector’s rerating momentum. We see strong upside for Bumi Resources Minerals (BRMS IJ, Buy) and Archi Indonesia (ARCI IJ, Buy) as they begin to monetize substantial reserves through new underground mining, while EMAS and Indika Energy ((INDY IJ, Buy) have scheduled to start gold operations in 2026, positioning the sector for sustained growth, in our view. United Tractor’s (UNTR IJ, Buy) recent acquisition of the Doup gold asset was value-accretive, setting the company for a future earnings growth profile, in our view.

Robust margins despite higher costs; recent Indonesia royalty hike

Global gold miners have delivered strong margin expansion in recent years, powered by a persistent rally in gold prices. Since 2016, gold prices have recorded a 12% CAGR, outpacing the industry’s all-in sustaining cost (AISC) CAGR of 7.2% (Fig. 20). This favorable spread has enabled miners to safeguard healthy free cash flows, even amid higher operating costs and inflationary pressures.

In Indonesia, the sector faces fresh cost headwinds: a government-mandated 60% royalty hike and the B40 biodiesel mandate, which push fuel costs up roughly 25%. Since royalties represent nearly 30% of overall AISC, we believe these changes will increase local miners’ AISC to around USD1,500-1,800/oz in FY25-26F. Despite these, miners have been maintaining attractive cash margin of 45-50%. Higher gold grade input for BRMS and ARCI could help reduce their overall costs.

Gold demand rises to all-time high as structural investment demand accelerates, while supply remains modest

Global gold demand has risen to new highs in 2025, powered by strong investment flows, rate-cut sentiment and central banks’ purchases, while supply growth has remained modest. Gold ETFs have been experiencing their strongest inflows since 2020, with several consecutive months of net inflows up to July 2025 (Fig. 25). Purchases by central banks remain significant, indicating a strategic investment shift from US assets toward gold reserves. Supply growth remains constrained by growing project lead times, falling grades, and cost pressures (Fig. 29). The average lead time for global mines continues to rise, with gold in particular taking 14 years for exploration, feasibility studies, and construction.

Bullish on Indonesia gold — Tailwind from potential index inclusion; timely expansions and multi-year growth

Indonesia gold companies are poised to benefit from the inclusion into Gold ETF indexes (BRMS and AMMN were included into GDX and/or GDXJ in September 2025). We expect every 1% GDX ETF weighting inclusion to translate to a potential ~USD200mn flow; ARCI and EMAS are the candidates most likely to be included, which we expect to be in 2026F. That said, we remain bullish on the Indonesia gold mining sector, reflecting our positive view on project execution, multi-year earnings growth, and compelling valuations. Using an estimated spot gold price of USD3,300/3,800oz for FY25F/FY26F, our comparative analysis highlights the sector’s favorable risk-reward profile.

Our top pick preference is ARCI > INDY > EMAS > BRMS > UNTR. We maintain our Buy rating on BRMS, given its early-mover advantages among junior miners with strong catalysts. We initiate coverage of ARCI with a Buy rating, highlighting its turnaround production and major high-grade discoveries. We also initiate coverage of EMAS with a Buy rating, which is a major gold player in Indonesia. We maintain our Buy ratings on INDY and UNTR given their compelling valuations. We believe that Indonesia remains well positioned to benefit from the global gold cycle through cost competitiveness, adapting to regulatory shifts, and unlocking value through expansion and new reserves.

Fig. 1: Stocks for action

Fig. 2: Indonesia gold companies’ production CAGR (FY26-FY29F)

Fig. 3: Indonesia gold companies’ earnings CAGR (FY26-FY29F)

Fig. 4: Indonesia gold project resources comparison

Fig. 5: Gold production comparison

Fig. 6: Gold companies' EV/resources valuation

Fig. 7: Indonesia gold cash cost remains competitive

Fig. 8: Indonesia gold players’ production trend comparison
(FY20–FY24)

Fig. 9: Indonesia gold players’ future production comparison (FY25–FY29F)

Fig. 10: Indonesia gold resources trend (FY21-FY24)

Fig. 11: Indonesia gold players’ stripping ratio trend comparison (FY20-FY24)

Fig. 12: Indonesia gold players’ debt trend comparison
(FY20–FY29F)

Fig. 13: Indonesia gold players’ capex trend comparison
(FY20–FY29F)

Total shareholder return (TSR) analysis framework assessment

Fig. 17: Indonesian – Australian gold players’ historical TSR (FY22-FY24)

Fig. 18: Indonesian gold players’ future TSR (FY26F)

We provide a TSR analysis as one of our stock analysis frameworks, integrating it with sector insights and bottom-up stock assessments – providing future TSR expectations based on earnings growth, dividends and valuation expectations as per current market capitalization level. Overall, given the gold outperformance, we believe the sector is poised for a structural rerating which should translate to earnings growth once project realizes.

Indonesia’s gold players delivered a solid +31% average TSR in 2022–2024 (see Fig. 17), led mainly by P/E re-rating (~69% attribution) with dividend yield (~14% attribution) buffering EPS softness. This is comparable with Australian junior gold peers of 82% within the same period. Notably, BRMS has a remarkable TSR (+228% in FY22–24) driven by rerating since Salim Group (unlisted), a major Indonesian conglomerate came in with a clear production and exploration plan for its vast gold and copper assets. Notably, we highlight UNTR, INDY, and ANTM are companies that have provided consistent dividend to the overall TSR equation, thanks to their diversified business. EPS growth, however, is a net drag for several names, especially ARCI and MDKA as they face operational setbacks.

For 2026F, we believe Indonesia’s gold miners are likely to register higher TSR, on likely accelerating EPS growth. We project a 45% TSR on average (see Fig. 18). The outlook is underpinned by continued gold-price tailwinds and the production roll-out of new projects starting next year (Pani Gold, Awak Mas gold), which should convert prior rerating into earnings follow-through. We expect laggards (ARCI and MDKA) to rebound as operational issues ease and volumes normalize, while TSR for both ANTM and UNTR should continue compounding via ongoing dividend contributions.

Tailwind from ETF index inclusion for Indonesia gold Companies

Among passive indexes, we highlight GDX (VanEck Gold Miners ETF) and GDXJ (VanEck Junior Gold Miners) as two large gold ETFs that have global gold miners in their weightings. Both GDX and GDXJ track MarketVector indices and have USD21bn and USD8.6bn asset under management (AUM), respectively, as of Oct 2025. Both the ETFs participate in investing into global gold miners common share with a weight component not exceeding a 7% cap to ensure diversification. BRMS and AMMN were included into the GDX and GDXJ in their September 2025 rebalancing. Post inclusion, BRMS’ stock price jumped 17% at the end of the trading day.

Fig. 19: Global gold miner ETF AUM comparison

To be included in the GDX/GDXJ, the requirements are as follows:

1. Companies must generate at least 50% of their revenues from gold and/or silver mining/royalties/streaming or have at least 50% of their mineral resources related to gold and/or silver.

2. Have a market capitalization of greater than USD150mn as of the end of the month prior to the month in which a rebalancing date occurs.

3. Stocks must have a three-month average daily trading volume value of at least USD1mn.

We expect every 1% GDX ETF weighting inclusion should translate into a potential ~USD200mn flow. Among others, we view ARCI and EMAS as the two most likely candidates to be included in the indexes, likely in 2026F.

Robust margins despite higher costs; recent Indonesia royalty hike

Global gold miners have delivered strong margin expansion in recent years, powered by a persistent rally in gold prices. Since 2016, gold prices have recorded a 12% CAGR, outpacing the industry’s all-in sustaining cost (AISC) CAGR of 7.2%. This favorable spread, in our view, has enabled miners to safeguard healthy free cash flows – even amid higher operating costs and inflationary pressures.

Fig. 20: Gold producers’ margins are expanding as higher gold price despite higher AISC

Gold cash cost is usually defined in USD cost per ounce of gold sold. Several factors that determine the cash cost level of a gold company include:

• Gold grade
• Stripping ratio – given mine location and geography
• Mining cost – including fuel, raw materials and transportation costs
• Royalties – Indonesia imposes a 16% gold royalty for gold above USD3,000/oz
• Technology – recovery rate and utilization rate

In Indonesia, the sector faces fresh cost headwinds, including a government-mandated 60% royalty hike and the B40 biodiesel mandate, which have pushed fuel costs up by roughly 25%. Since royalties represent nearly 30% of overall AISC, we believe these changes will increase local miners’ AISC to around USD1,500-1,800/oz in FY25–26F. Despite these pressures, miners have been maintaining attractive cash margin of 45-50%. Higher gold grade input for BRMS and ARCI could help to reduce their overall costs.

Gold processing: Carbon-in-leach (CIL) and heap leach

Gold ore deposits are highly variable: some zones have rich, high-grade gold, while others have gold of much lower grade. When prices are low, miners stick to high-grade ore to keep costs down. If prices rise, it becomes profitable to mine lower-grade ore that was previously too costly. However, mining technology and infrastructure set physical limits, so even as more ore becomes economically viable, total gold output can't increase dramatically in the short term.

It may make sense for some deposits to have both CIL and heap leach facilities. We believe CIL is particularly suited for higher-grade ores, offering a more efficient, faster and high gold recovery process compared to heap leaching. On the other hand, heap leaching is typically used for lower-grade ores; it is a more cost-effective method but slower in comparison.

Process overview:

The Carbon-in-leach (CIL) process involves mixing finely ground ore with cyanide solution in a series of tanks, where gold is dissolved and simultaneously absorbed onto activated carbon. The carbon, loaded with gold, is then separated from the slurry and processed to recover the gold.

The Heap leaching process involves stacking crushed ore onto a leach pad and then applying a leaching solution, typically cyanide, which percolates through the heap to dissolve the gold. The solution is then collected and processed to extract the gold

Gold demand: Structural investment demand accelerates

Global gold demand has risen to new highs in 2025, powered by strong investment flows and central banks’ purchases, while supply growth has remained modest. Investment and jewelry remain the largest contributors to demand, accounting for 77% of demand in 2Q25, according to the World Gold Council.

• Gold ETFs have experienced the strongest inflows since 2020, with several consecutive months of net inflows up to July 2025.

• Central banks’ purchases have remained significant, indicating a strategic investment shift from US assets toward gold reserves.

• Historically, there has been a strong correlation between gold performance during and after US Fed rate cuts.

• We expect global jewelry demand to decline owing to weakness in China

In Indonesia, we highlight ANTM as a proxy of retail gold bar investment demand, given its continued rise in sales which reached an all-time high in 2Q, indicating growing local demand. Furthermore, we expect ARCI, with its retail business, to benefit from this increased demand for local gold bars and jewelry.

Fig. 22: Gold 10Y performance vs that for other major class assets (SPX, VanEck gold ETF, VanEck junior gold ETF)

Fig. 23: Gold demand by category, 2Q25

Fig. 24: Gold demand trend by category

Fig. 25: Gold ETF consecutive months of high flow since early 2025

Fig. 26: Gold prices have rallied during and post rate cuts

We have seen rising global gold demand from central banks, with gold currently amounting to 21% of global reserves in 1Q25 from 13% in 2020, slowly replacing FX reserves’ dominance. Breaking down FX currency reserves, USD still dominates at 58% followed by EUR at 21% and others at 22% (including GBP, CNY and JPY).

Fig. 27: Rise in gold as a % of total reserves

Gold supply: growth constrained by growing project lead times

Total global gold supply recorded a modest increase throughout 2015-2024, driven by recycled gold supply, as consumers and collectors took profit at high prices.

• According to Metals Focus, gold supply from mines is expected to rise by 1% to a new record of 3,694t in 2025 from 3,661t in 2024.

• Recycling increased to 1,367t in 2024 in response to consumers and collectors taking profit at higher prices.

We believe it is worth noting that around 10% of global gold production is a by-product of base metal mining – mainly for copper and lead – not dedicated gold mines. This means that the amount of gold produced from these sources depends more on base metal market dynamics than on the price of gold itself; so these sources may not increase output, even if gold prices surge. Further, growth remains constrained by growing project lead times, falling grades, and cost pressures.

Fig. 28: Global gold supply, 2015-2024

The average lead time for global mines continues to rise, with duration nearly three times longer than the lead time for mines that began operations between 1990 and 1999. Mines take longer to commission due to longer exploration, permitting and financing times, despite the recent decline in construction time. Gold in particular takes 14 years for exploration, feasibility studies, and construction to production. Underground mines take around 16 years lead time vs a lead time of 15 years for open pit mines.

Fig. 29: Gold mine has a 14-year lead time from exploration to production

Indonesia ranked in the top 10 gold mine producing countries in 2024, with production reaching 140 tons of gold. In terms of reserves, Indonesia ranks as the fourth-largest worldwide (as per data from USGS).

Fig. 30: Indonesia among top 10 gold producing countries globally (2024)

Fig. 31: Global gold reserves (2024)

Fig. 32: Indonesia gold production trend