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#ASX Announcements
Added 4 days ago
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#Trading update
Last edited 4 weeks ago

8-July-2020:  Trading update - June quarter

Another positive update from Saracen (SAR).  As US stocks fell overnight, gold futures jumped to as high as US$1810.80/oz and last traded at $1807.60/oz.  Spot gold remained just below $1800/oz but still reached an eight-year high.  Australian dollar spot gold was trading at A$2582/oz, well below recent highs due to the strength of the Australian dollar, which last traded at US69.48c.  But gold is still heading in a north east trajectory.  

SAR:  Record FY20 production and cash flow

Net cash of A$48m at 30 June, up from net debt of A$21m at 31 March

HIGHLIGHTS: 

  • June quarter gold production of 145,830oz (KCGM 50% 53,398oz, Carosue Dam 50,315oz, Thunderbox 42,117oz)
  • Record FY20 production of 520,414oz (KCGM 50% 132,595oz, Carosue Dam 203,281oz Thunderbox 184,538oz), ahead of FY20 guidance of +500,000oz
  • Gold sales for the quarter of 148,011oz at an average sale price of A$2,280/oz for sales receipts of A$337.5m (72,300oz delivered into the hedge book at an average price of A$1,938/oz)
  • Cash and bullion of A$369.3m at 30 June 2020 (A$338.8m at 31 March 2020) after making a debt repayment of A$38.5m, paying A$15.7m tax, and spending approximately A$89-94m on growth capital and exploration in the June quarter
  • Debt A$321.5m; Net cash of A$48m at 30 June 2020, up from net debt of A$21m at 31 March 2020

Saracen Mineral Holdings (ASX: SAR) is pleased to announce record production and cash flow for the year to 30 June 2020. Group gold production of 520,414oz for FY20 was ahead of guidance of +500,000oz.

In response to COVID-19, Saracen flagged the potential to prioritise the milling of higher grade portions of the stockpiles at Carosue Dam and Thunderbox in the June quarter (see March quarterly report, 28 April 2020). However, COVID-19 ultimately had a limited impact on the business and therefore this plan was not implemented and Saracen continued to execute its long-standing ‘futureproof the business’ strategy.

Managing Director Raleigh Finlayson said the results reflected Saracen’s ongoing success in meeting or exceeding guidance and in generating growth. “We have now met or exceeded guidance for seven straight financial years,” he said.

“We are also meeting our undertakings to continue driving growth and we expect this to be clearly evident in our strong news flow over the coming months.”

This news flow will include the June quarter report, Carosue Dam and Thunderbox update, FY20 financial results, and KCGM update. Each update will include drill results, Resources and Reserves, and production and cost outlook.

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Plenty of news flow over coming weeks from SAR, Australia's 4th largest pure-play gold producer.  By "pure-play", I mean over 70% of their total production is Au (gold).  So companies like IGO, SFR, OZL and BHP are not included, because they produce gold as either a byproduct of other production or else gold is not their main game.  Our largest 4 pure-play gold producers are NCM, NST, EVN & SAR.  I hold 3 of those 4 - all but NCM. 

It's a GOOD time to be holding quailty gold producers, particularly if bought at lower levels.

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#Quarterly Reports
Last edited 3 months ago

28-April-2020:  Quarterly Activities Report  and  Quarterly Presentation

  • Production
    • Record quarterly gold production of 158,132oz at AISC of A$1,133/oz; Production for nine months to March 31 374,584oz at AISC of A$1,081/oz
    • Record quarter at Thunderbox with production of 50,091oz at AISC of A$682/oz driven by C Zone pit; Carosue Dam produced 49,478oz at AISC of A$1,308/oz; KCGM produced 58,563oz (Saracen’s 50%) at AISC of A$1,415/oz 
    • COVID-19 had minimal impact on March quarter production, however there is no certainty the June quarter will not be impacted; FY2020 guidance of +500,000oz retained 
    • Saracen has large ore stockpiles exceeding 1.7Moz at 31 March; These will help insulate the business should mining be restricted from any COVID-19 impacts; Pro-active milling of higher-grade stockpiles underway at Carosue Dam and Thunderbox to bring forward production ounces and cash flow into FY20
  • Financial
    • Gold sales for the quarter of 165,798oz at a record average price of A$2,228/oz, generating revenue of A$369m 
    • Cash and equivalents of A$340.3m at 31 March (A$283.8m at 31 December) after making an additional early debt repayment of A$25m, paying a final FY19 tax payment of A$15m, and investing A$14m in exploration
    • Quarterly unaudited NPAT of A$65m - A$70m
    • Post the end of the quarter, Saracen made the decision to draw down its A$45m revolving credit facility to maximise cash reserves given COVID-19 uncertainty
    • 10.5% interest in Red 5 Limited (ASX: RED) sold for A$39m pre-tax 
    • Gold hedging of 542,500oz at an average delivery price of A$2,056/oz (538,500oz at A$1,997/oz at 31 December) 
  • Discovery and growth
    • Exploration success across the portfolio, including previously announced drill results at: 
      • Karari - Dervish (Carosue Dam) 22m @ 5.6g/t, 17m @ 6.9g/t, 14m @ 8.0g/t, 10m @ 10.7g/t and 14m @ 5.1g/t
      • Safari Bore (Carosue Dam) 4m @ 19.3g/t, 26m @ 2.4g/t, 45m @ 1.5g/t and 36m @ 2.1g/t (open pit-able)
      • Otto Bore (Thunderbox) 15m @ 11.2g/t, 16m @ 5.7g/t and 7m @ 5.3g/t (open pit-able) 

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[Disclosure:  I hold SAR shares]

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#Quarterly Reports
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#Fatality at Dervish Mine
Added 3 weeks ago

14-7-2020:  Fatality at Dervish Mine

15-7-2020:  Operations resuming at Carosue Dam

[I hold SAR shares]

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#Trading update
Added 4 months ago

27-March-2020:  Trading update

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#ASX Announcements
Added 6 months ago

18-Feb-2020:  Latest drilling paves the way for further inventory growth

On the back of yesterday's positive H1 report, Saracen have announced some positive drilling results today, including intercepts of up to 19.3 grams/tonne (g/t) Au (gold) at Safari Bore (open pit-able drill results).  They're also finding more gold at Karari - Dervi, at their Atbara discovery (just 4km from the Carosue Dam mill), and at Otto Bore (part of Thunderbox).  I hold SAR shares.

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#Reports and Presentations
Added 3 months ago

06-May-2020:  Corporate Presentation - May 2020 - "There's Nothing Like Australian Gold"

Disclosure:  I hold SAR as part of my "Big 5", which also includes NST, EVN, SBM & RRL.  At the smaller end, I also hold PNR.

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#Reports and Presentations
Added 6 months ago
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#Results
Last edited 6 months ago

17-Feb-2020:  Saracen continues run of strong growth in profit

Saracen continues run of strong growth in profit and cashflow with more to come

Underlying NPAT up 84% to A$80m from production of 216,452oz;  FY20 guidance +500,000oz

HIGHLIGHTS

  • Underlying net profit after tax¹ (NPAT) for 6 months to December 31 rises 84% from previous corresponding period (PCP) to A$80.2m (PCP: A$43.5m)
  • Statutory NPAT up 61% to A$69m; Revenue up 45% to A$409.9m; Operating cashflow up 35% to A$152m
  • Gold production rises 22% to a record 216,452oz, including a 1-month contribution from the Super Pit
  • AISC steady at A$1,041/oz (PCP: A$1,030/oz); Average realised gold price 18% higher at A$1,984/oz
  • Cash and equivalents of A$283.8m at 31 December (A$196.1m at 30 September) after paying US$750m for 50% of the Super Pit gold mine in Kalgoorlie, paying A$10m for Sinclair, raising A$796m in equity, drawing A$400m in debt and making an early debt repayment of A$15m
  • On track to meet FY20 production guidance of +500,000oz
  • Strong balance sheet supports aggressive exploration to continue growing Reserves beyond 7 Moz

Saracen Mineral Holdings (ASX: SAR) is pleased to announce that it recorded further strong growth in production, cashflow and profit in the six months to 31 December 2019.

The result, which included a one-month contribution from the KCGM Super Pit, was underpinned by production of 216,452oz, a rise of 22 per cent from the previous corresponding period.

Saracen is on track to meet its FY20 production guidance of +500,000oz. This includes allowing for a seven-month contribution from the Super Pit. Guidance for FY21 will be published early in the September quarter 2020, following updated Resources and Reserves.

In the six months to December 31, underlying NPAT increased 84% to A$80.2 million. This came on the back of a 45% jump in sales revenue to A$409.9 million and increased gold sales of 206,277² ounces (PCP: 167,095 ounces) at an average sale price of A$1,984/oz. One-off transaction costs of A$10.8 million (net of tax) were incurred on the Super Pit transaction and expensed in this period.

EBITDA³ increased 71% to A$178.6 million (underlying EBITDA A$194.4m) and statutory NPAT increased 61% to A$69.1 million.

Saracen Managing Director Raleigh Finlayson said the results showed the Company was in the midst of a strong growth phase at all levels of its business.

“The key message from these results is that Saracen has continued to grow and will continue to grow,” Mr Finlayson said. “We are growing production and our inventory through a financially-rewarding combination of aggressive near-mine exploration and prudent acquisition, all within 300km of Kalgoorlie.

“With the addition of the Super Pit and the Carosue Dam mill expansion set for commissioning in the December quarter, our production and cashflow is poised to continue growing.

“We are also looking forward to the results of the review we are undertaking at the Super Pit, which is a world-class asset with an exceptional future.”

Mr Finlayson said the acquisition of a half-share of the Super Pit for US$750m in November last year had seen the Company emerge with a vastly different production profile, cashflow projections and balance sheet.

“Saracen has shifted to another level in the league of global gold producers with the key benefits that brings for scale, asset diversity and cashflow,” he said.

“But we still have a desire to maintain a conservative balance sheet and therefore we are placing a strong emphasis on debt reduction.

“As part of this strategy, we have made the decision not to pay a dividend in relation to this half year. In line with our stated policy, the Board will revisit this matter at the end of the financial year.”

Overview:

  • 84% increase in underlying NPAT¹ to A$80.2 million
  • 71% increase in EBITDA³ to A$178.6 million (underlying EBITDA A$194.4m)
  • 22% increase in group production to 216,452 ounces
  • Steady group AISC of A$1,041/oz

[continues... click on link above for more]

Notes:

  • ¹ Underlying NPAT = Underlying Net Profit After Tax. Underlying NPAT is a financial measure which is not prescribed by the International Financial Reporting Standards (IFRS) and represents the net profit after tax under IFRS, adjusted for specific items. The Directors believe that Underlying NPAT is an appropriate measure to assist investors with their understanding of the Company’s operational performance in the half-year ended 31 December 2019. Underlying NPAT has not been subject to any specific review procedures by the auditor but has been extracted from the half year financial statements by the Company. 
  • ² Ounces sold exclude 8,605oz ($16.3 million) of sales that relate to development activities.
  • ³ EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation and is a financial measure which is not prescribed by the IFRS.  EBITDA has not been subject to any specific review procedures by the auditor but has been extracted from the half year financial statements by the Company.

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I hold SAR shares.

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