Top member reports
No meetings
Consensus community valuation
The consensus valuation is for members only and has been removed from this chart. Click for membership options.
No value forecast available for this company
Contributing Members
Content is delayed by one month. Upgrade your membership to unlock all content. Click for membership options.
#Scheme becomes Effective
stale
Added 3 years ago

Scheme Becomes Effective

Saracen Mineral Holdings Limited (ASX:SAR) and Northern Star Resources Ltd (ASX:NST) are pleased to announce that Saracen has today lodged with the Australian Securities and Investments Commission (ASIC) a copy of the orders of the Supreme Court of Western Australia (“Orders”) approving the scheme of arrangement pursuant to which Northern Star will acquire all of the shares in Saracen (“Scheme”). As a result, the Scheme is now legally effective.

A copy of the Orders as lodged with ASIC is included as Appendix 1 to this announcement.

Suspension of Trading

Saracen shares will be suspended from trading on the ASX at the close of trading today, Wednesday, 3 February 2021. Scheme Consideration Saracen shareholders who hold shares at the Scheme record date, being 7:00pm AEDT on Friday, 5 February 2021 (“Scheme Record Date”), will receive scrip consideration of 0.3763 new Northern Star shares for every 1 Saracen share held at the Scheme Record Date (“Scheme Consideration”).

It is expected that the Scheme will be implemented, and the Scheme Consideration will be paid to Saracen shareholders, on Friday, 12 February 2021

Read More
Valuation of $6.06
stale
Added 3 years ago
Scroll down for more recent updates... 01-Aug-2019: 3 to 6 month PT based purely on momentum rather than fundamentals. I have largely ignored SAR, choosing instead to invest in NST, EVN, SBM and a handful of others in the gold sector. However, Saracen is making themselves quite hard to ignore any longer, as I have outlined in my bull case straw. . . . . . . . . . . . . . . . . . . . . . . 02-Feb-2020: That $4.77 PT that I locked in in on Aug 1 last year when SAR were $4.05 was almost reached 5 days later (Aug 6) when SAR traded as high as $4.75, but it was all downhill from there, until they bottomed at $2.82 on the 13-Dec-2019. From there, they have been on an impressive march back up in a consistent North Easterly direction, and closed on Friday (31-Jan-2020) at $3.95, being a +40% rise in just under 7 weeks. Their purchase of Barrick Gold's 50% of Kalgoorlie Consolidated Gold Mines (KCGM, whose main asset is the prolific Kalgoorlie Super Pit Gold Mine on the edge of the town of Kalgoorlie) did them no harm at all, and when Northern Star (NST) bought the other 50% off Newmont Goldcorp shortly afterwards, sentiment towards SAR improved even further. Whether it was validation that there was value there and that SAR hadn't overpaid for a dud asset - or whether it was further M&A speculation (like that NST might try to takeover SAR and gain 100% control over KCGM) - I do not know. Whatever it was, it was good for SAR, and I since I'd just added them to my SMSF (right after they bought that 50% share of KCGM), I wasn't complaining at all. So now, what are they worth? What they are worth will depend a fair bit on the prevailing gold price at the time, particularly in Australian dollars, since ALL of SAR's mines are located here in Australia, and the A$ gold price keeps setting new all-time highs. All things considered, I reckon I'll just stick with my $4.77 price target. It's only around 21% above their current SP, and if recent history is anything to go by, they can put on 21% in a reasonably short period of time when sentiment is on their side - which it certainly appears to be currently. $4.77 it is then! 04-Aug-20: Let's go with $7. It's a good number! Saracen are Australia's 4th largest pure-play gold producer now, and they're certainly benefitting from the increasing gold price, and should continue to do so. 02-Feb-2021: Saracen are about to be absorbed into Northern Star Resources on the basis of scrip consideration of 0.3763 new Northern Star shares for every 1 Saracen share held on the Scheme record date (Friday, 05-Feb-2021), plus a Special Dividend of $0.038 for every 1 Saracen share held at the Special Dividend Record Date - which is tomorrow (03-Feb-2021), meaning they go ex-div for that spec. div. today (02-Feb-2021). Northern Star (NST) closed at $12.97 yesterday, so that values SAR at $4.92/share. However, I value NST at at least $16/share, particularly as they will now become one of the 10 largest gold miners globally, so are going to attract a lot more international attention. They are also one of the best run gold miners globally and certainly the best run goldy that Australia has ever produced. Based on a $16/share value for NST, that means SAR is worth $6.06/share (including the value of that special dividend), so that's my updated valuation for SAR. I hold SAR and NST, and I think the merger makes a LOT of sense and will actually realise hundreds of millions worth of synergies. The boards of NST & SAR have declared that the transaction unlocks A$1.5-2.0 Billion of synergies (pre-tax NPV, discounted at 5% and net of stamp duty) over the next 10 years. That's pretty compelling even if they only achieve half of that. In summary, the merger is logical, earnings accretive M&A - A unique and significant opportunity to combine complementary assets and management teams - and creates a Top-10 global gold miner, with three large-scale Tier-1 production centres. For those who don't already own them, I'm thinking it's too late now to be buying SAR shares, particularly because you'll miss out on the special dividend (with today being the ex-div date), and because they are not trading at a significant discount to their value based on the current market value of NST, unless NST rise significantly today and SAR do not. However, one way or the other, I do think that owning shares in the merged group (which will be called Northern Star Resources and have the NST ticker code) is a good idea, if you're bullish - or even neutral - on gold. Obviously, if you think the gold price is going to fall, then you are probably best off to avoid the sector altogether. However, leaving that aside for a second, the total shareholder returns delivered by NST management over all significant timeframes (3, 5, or 10 years) have been nothing short of phenomenal, regardless of people's view on gold, so they are a very good set and forget type of company, i.e. ideal for super funds, in my opinion. And I will always hold NST in my own super fund, as well as in most of my other portfolios, incuding my Strawman.com virtual portfolio. Because I hold SAR & NST, once the merger completes (this month), NST will become the largest position in my Strawman.com portfolio, and rightfully so.
Read More
#ASX Announcement 15/1/21
stale
Added 3 years ago

Saracen shareholders vote overwhelmingly in favour of merger with Northern Star

Overwhelming support for deal to create a Top-10 global gold miner which is expected to unlock synergies with an estimated NPV of A$1.5-A$2b1

View Attachment

Read More
#SAR & NST to merge
stale
Last edited 4 years ago

06-Oct-2020:  Presentation - SAR and NST agree to Merger of Equals

plus:  Saracen and Northern Star agree to Merger of Equals

and:  Saracen AGM Presentation - "There's nothing like Tier 1 Gold"

Transaction rationale

The scale and liquidity to attract both gold and generalist investors.

  • Top-10 global gold miner with sector-leading production growth; pathway to 2Mozpa 
  • Size and liquidity to attract generalist as well as gold-focused global investors and Australian large cap funds
  • Increased investor relevance and capital markets presence
  • One of the few global gold companies of this scale with operations exclusively in Tier-1 jurisdictions
  • Long-life producer with over 19Moz in Reserves and 49Moz in Resources
  • Combined market capitalisation of ~A$16.0 billion with strong global share register
  • Strong balance sheet with pro-forma net cash of A$118 million (as of 30 June 2020)
  • Strengthened platform to capitalise on accretive M&A opportunities.

A compelling combination - Takeaways

A unique opportunity exclusively available for both companies to unlock significant value, and build a major global gold producer with an exceptional high-margin growth profile.

Benefits to Northern Star shareholders

  • Exposure to high-quality, de-risked operations and infrastructure at Thunderbox and Carosue
  • Saracen’s open pit expertise.

Benefits to Saracen shareholders

  • Stronger near-term cash flows
  • Exposure to growth and North American platform through Pogo
  • Northern Star’s underground expertise.

Benefits to both sets of shareholders

  • Top-10 global producer, with 19Moz in Reserves and 49Moz in Resources
  • Complementary Board and management teams to drive growth and continued sector-leading returns
  • Diversification of production and cash flows across a number of high quality, low-risk Tier-1 jurisdictions
  • Transaction unlocks A$1.5-2.0B NPV in pre-tax synergies to be delivered via geographic, operational, and strategic synergies
  • Leading approach to environmental, social and governance principles and practices
  • Consolidation of ownership at KCGM for the first time [NST & SAR own KCGM 50/50 - which includes the Kalgoorlie Super Pit]
  • Dominant position in greater Kalgoorlie district, targeting 1.1Mozpa in production
  • Rationalised ownership of the Yandal belt, spanning Jundee, Bronzewing and Thunderbox
  • Significant organic growth pipeline across a merged portfolio with enviable geological endowment
  • Enhanced financial strength and flexibility to pursue accretive M&A
  • Increased investor relevance and capital markets profile

--- click on links above for more ---  [and there is a lot more]

[I hold both NST & SAR shares, and I flagged this merger as a possibility last year and again earlier this year after the two companies became JV partners in KCGM - i.e. the Kalgoorlie Super Pit.  It just makes sense.  Very positive IMO.]

Read More
#ASX Announcements
stale
Added 4 years ago
Read More
#Reports and Presentations
stale
Added 4 years 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.

Read More
#Reports and Presentations
stale
Added 4 years ago
Read More
#Results
stale
Last edited 4 years 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.

---

I hold SAR shares.

Read More
#Bull Case
stale
Last edited 4 years ago

03-Aug-2019:  OK, where to start?  Saracen is Australia's 4th largest listed pure-play gold producer.  By "pure-play", I mean that I am not including companies like BHP, SFR, OZL or IGO who also produce gold, but either as a byproduct of other metals production or as a secondary revenue stream.  The pure-plays are the gold producers whose primary focus is gold, and the top 10 (in order of market cap, from biggest to smallest) are currently:

  1. NCM, Newcrest Mining
  2. EVN, Evolution Mining
  3. NST, Northern Star Resources
  4. SAR, Saracen Minerals
  5. OGC, OceanaGold Corporation
  6. RRL, Regis Resources
  7. SBM, St Barbara
  8. RSG, Resolute Mining
  9. SLR, Silver Lake Resources
  10. PRU, Perseus Mining

It's a dynamic time in the Australian gold mining industry.  Just in the past few days Evolution have moved back ahead of Northern Star for the first time in a few years, and OGC have leapfrogged back over Regis.

Eleven months ago, in late August 2018, when I last compiled a list of all of the ASX-listed pure-play gold producers (there were 29 of them), SAR was at #7, Dacian Gold (DCN) was at #9, and Aurelia Metals (AMI) was at #10.  AMI is now down at #15 and DCN has fallen all the way down to #17 with a market cap that has shrunk from half a billion to now being less than half of that, at $216 million.

A$ gold has been hitting new highs throughout July, and again over the past couple of days (in early August) - and while the US$ gold price is now US$1,440.64/oz, the A$ gold price is now at an all-time record high of A$2,117.66/oz thanks to an A$ that is now worth less than 68 US cents.  As I type this, the USD/AUD exchange rate = 0.67974.  

While Australia's three largest gold miners (Newcrest, Evolution and Northern Star) have all almost doubled their market cap over the past 11 months, two of our current top 10 have done even better.  Saracen has gone from being worth $1.522 billion to now being worth $3.684 billion, and Perseus has gone from $373 million to $858 million.  Amazingly, Perseus (PRU) has done it with just two gold mines in West Africa (and a third on the way), while Saracen has done it with a suite of gold mines located here in Australia, so they've benefited from the depreciation of the A$ against the US$. 

In a Livewire article published yesterday (Aug 2nd), which you can view here, Eley Griffiths Group's Ben Griffiths had this to say about Saracen:  

"Your manager continues to be a supporter of gold producer/explorer Saracen Minerals (SAR), a holding central to our favourable view on bullion. Management have proven to be masterful stewards of capital over a long period of time. Their ability to grow production ounces through exploration, development and acquisition is close to sector best. We await their seven-year production outlook (including revision to resource/reserves) due to be announced in the month ahead."

While Saracen has looked expensive to me for the past 18 months, they just keep getting more expensive, and with the A$ gold price heading the way it is, there are certainly reasons to expect that to continue.

I recall that Saracen was one of the gold stocks that Peter Hall held in the Hunter Hall Global Value Fund (then HHV, now PIA) in 2016 before Donald Trump was elected as POTUS.  When the market rallied instead of crashing after the election, as well as two of Peter's high-conviction stock-picks crashing at the same time (Vocus and Sirtex), he threw in the towel, sold all of his HHL & HHV shares to Soul Patts (SOL), and the SOL-backed Pengana Capital Group (PCG) took over Hunter Hall International and the management of HHV (the LIC), which they promptly renamed - HHV became PIA - the Pengana International Equities Fund.  Pengana sold off all of Peter Hall's gold stocks in the process.  PIA haven't done particularly well since then, but the gold stocks that they sold in early 2017 have shot the lights out. 

Peter Hall was right about Trump as POTUS being good for gold, but he was too early, which, as Strawman suggested today in his Saturday morning "What's Trending on Strawman?" email, is the same as being wrong.

The strong tailwind of a rising gold price hasn't resulted in all of the sector doing well of course.  A number of players have struggled with lower grades and higher costs than they had anticipated, including Dacian (DCN), Gascoyne (GCY, now in voluntary administration), Beadell Resources (was BDR, now delisted from the ASX after being taken over by TSX and NYSE-listed Great Panther Mining), and Blackham Resources (BLK, who are currently being propped up financially by their mining contractor, MACA - ASX:MLD).

Those gold producers with the best management and the best mines have thrived however, and Saracen (SAR) can certainly be included in that list.

Read More