10-Feb-2021:  Record profits, record production   plus   Half Year Accounts

SAR is no longer trading on the ASX, as they have now been absorbed into (taken over by) Northern Star Resources (NST), who also reported very good numbers this morning.  This final set of results from Saracen (SAR) is pretty good too:

HIGHLIGHTS

• Underlying net profit after tax¹ (NPAT) for six months to December 31 rises 85% from previous corresponding period (PCP) to a record A$148.0m (PCP: A$80.2m)
• Statutory NPAT up 74% to A$120.5m; Revenue up 47% to A$601.7m; Operating cashflow up 79% to A$272.2m
• EBITDA² up 44% to A$257.3m (PCP: A$178.6m)
• Gold production up 43% to a record 309,512oz
• AISC of A$1,196/oz (PCP: A$1,041/oz) following the Super Pit acquisition (included from 1st December 2019)
• Gold sales³ of 255,938oz at an average realised price of A$2,343/oz
• Cash and equivalents of A$466m at 31 December (A$372m at 30 June 2020) after investing A$233m in growth projects and exploration, paying A$55m in tax and making A$39m in debt repayments
• Debt of A$283m; Net Cash of A$183m up from a net debt position of $168.2m at 31 December 2019
• All results relate only to Saracen, Northern Star and Saracen financial results to be combined from 12th February 2021 (merger implementation date)

Notes:

¹ Underlying NPAT stands for 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 2020. 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 as set out in Table 2 above.

² EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation and is a financial measure which is not prescribed by the International Financial Reporting Standards (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.

³ Ounces sold exclude 47,015oz (A$108.3 million) of sales that relate to development activities.

--- click on the links at the top for more ---

[I did hold SAR shares prior to the merger, and I still hold NST shares.]

21-Jan-2021:  Quarterly Presentation   plus   Quarterly Activities Report

Record half with 309,512oz production at AISC of A$1,196/oz

Result in line with production guidance and ahead of cost guidance; Unaudited interim NPAT of A$115m - A$125m

[I hold SAR & NST shares.]

15-Jan-2021 (3:54pm):  Saracen shareholders back Northern Star merger

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$2b*

Saracen Mineral Holdings Limited (ASX:SAR) is pleased to announce that the requisite majorities of its shareholders today voted overwhelmingly in favour of the proposed scheme of arrangement under which Northern Star Resources (ASX: NST) will acquire all the shares in Saracen (Scheme).

Results of the Scheme Meeting

In accordance with Listing Rule 3.13.2 and section 251AA of the Corporations Act 2001 (Cth), a detailed report of the votes cast on the resolution approving the Scheme is included as Appendix 1 to this announcement.

99.95% of Saracen shares and 98.18% of Saracen shareholders that voted at the Scheme Meeting were cast in favour of the Scheme.

Saracen Managing Director Raleigh Finlayson said the merger had won exceptionally strong support from shareholders.

“Our shareholders have been virtually unanimous in their support for our merger with Northern Star,” Mr Finlayson said.

“I would like to thank them for their huge vote of confidence in our plan to create a world-scale gold miner which will benefit from extensive synergies, economies of scale, outstanding free cash flow and one of the strongest growth profiles in the global gold mining industry.

“We are looking forward to implementing our strategy, which will see us target annual production of two million ounces a year exclusively in tier-1 locations.”

Next steps

Saracen will now seek the Supreme Court of Western Australia's approval of the Scheme at a hearing scheduled for 10:00am (AWST) on Tuesday, 2 February 2021 (Second Court Hearing).** Further details about the Second Court Hearing are included as Appendix 2 to this announcement.

If the Supreme Court of Western Australia approves the Scheme at the Second Court Hearing, Saracen intends to lodge the orders of the Supreme Court of Western Australia with the Australian Securities and Investments Commission on Wednesday, 3 February 2021, so that the Scheme will become effective on that date. If this occurs, Saracen shares will be suspended from trading on ASX with effect from the close of trading on Wednesday, 3 February 2021.

Implementation of the Scheme is still expected to occur on Friday, 12 February 2021, subject to the satisfaction or waiver of the remaining conditions to the Scheme (including approval by the Supreme Court of Western Australia).

Notes:

1. (*) Represents the pre-tax NPV of the synergies, discounted at 5% over the respective mine lives and net of stamp duty.
2. (**) The Scheme remains subject to certain conditions. The Second Court Hearing will only occur if all of the remaining conditions precedent to the Scheme (other than the Supreme Court of Western Australia's approval of the Scheme) have been satisfied or waived as at 7.00am (AWST) on Tuesday, 2 February 2021 (being the date that is currently scheduled to be the Second Court Date). Full details of the conditions precedent to the Scheme (and other terms of it) are set out in the Merger Implementation Deed dated 6 October 2020 (as amended), a copy of which is included in the Scheme Booklet and which is available on the ASX website at www.asx.com.au and on Saracen's website at www.saracen.com.au.

--- click on the link at the top for the full announcement ---

[I hold SAR & NST shares.]

Scheme Timetable

The key dates expected for the Scheme are set out below.

• Second Court Date: Tuesday, 2 February 2021
• Effective Date: Wednesday, 3 February 2021
• Special Dividend Record Date: 7:00pm (AEDT) Wednesday, 3 February 2021
• Scheme Record Date: 7:00pm (AEDT) on Friday, 5 February 2021
• Special Dividend Payment Date: Thursday, 11 February 2021
• Implementation Date: Friday, 12 February 2021
• New Northern Star Shares commence trading on ASX on T+2 basis: Monday, 15 February 2021

13-Jan-2021:  Update on Special Dividend and NST-SAR Merger Timeline Update

SAR will pay a special fully franked $0.038 (3.8c/share) div on 11-Feb-2021 on the condition that the merger with NST (Northern Star Resources) goes through on 03-Feb-2021, which is also the record date for the div, so the ex-div date would be Tuesday 02-Feb-2021.

[I hold SAR and NST shares across three of my portfolios plus both are also on my Strawman.com scorecard.]

22-Oct-2020:  Quarterly Activities Report   and   Quarterly Presentation

Highlights:

Solid start to FY21, strong cash flow: 

• Safety - LTIFR at 1.4
• Quarterly gold production - 154,388oz at AISC A$1,169/oz
• At 30 September - Cash / liquids A$467m, debt A$321m [i.e. net cash position]
• Quarterly cash build - A$98m
• Record quarterly unaudited NPAT - A$70m to A$80m
• Growth projects: Carosue Dam mill expansion, Thunderbox Underground development accelerated, Thunderbox D Zone, KCGM Morrison and OBH open pits
• A$14m invested in exploration, Group Reserves and Resources updated to 8.6Moz and 17.0Moz respectively 

All reported KCGM metrics are attributable to Saracen, i.e. 50% share, unless stated otherwise.

--- click on the links above for much more ---

[I hold SAR shares.]

09-Oct-2020:  KCGM Site Visit Presentation - Diggers & Dealers, October 2020, Kalgoorlie, WA.

[I hold both NST and SAR, who are 50/50 JV partners in KCGM - Kalgoorlie Consolidated Gold Mines, which owns the massive Kalgoorlie Super Pit - and NST & SAR are about to merge, and they have both been bid up significantly since that announcement on Tuesday (6-Oct-2020).  It came as no surprise to me, as I have been expecting this to occur since they became JV partners in KCGM.]

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.]

08-Sep-2020:  Presentation - There's nothing like Australian gold

[I hold SAR shares.]

19-August-2020:  Record earnings on rising production   and   Presentation FY20 Financial Results

plus   FY20 Annual Report and Financial Statements   and   Appendix 4E

Underlying net profit after tax up 173% to record A$258m on rising production

Saracen set for further earnings growth as production jumps to ~700,000ozpa in FY24, before climbing to ~800,000ozpa in FY27

HIGHLIGHTS

• Statutory NPAT up 105% to a record A$189.7m (FY2019: A$92.5m)
• Underlying NPAT¹ up 173% to a record A$257.5m (FY2019: A$94.2m)
• EBITDA² up 104% to a record A$447.6m (FY2019: A$219.5m)
• Underlying EBITDA (note 3) up 140% to a record A$530.9m (FY2019: A$221.2m)
• Revenue up 93% to A$1,074.0m (FY2019: A$555.6m)
• Gold production rises 47% to a record 520,414oz (FY2019: 355,077oz)
• All-In-Sustaining-Costs (“AISC”) steady at A$1,101/oz (FY2019: A$1,030/oz)
• Cash and equivalents increased to A$372.0m at 30 June 2020 (A$154.4m at 30 June 2019) after spending A$272.6m on exploration and growth
• Debt of A$321.5m; Net Cash position of A$48m just seven months after drawing down A$400m to partly fund the acquisition of 50% of the Kalgoorlie Super Pit
• Strengthening balance sheet supports ongoing investment in exploration and growth; This includes the "future-proof" strategy of investing capital in the short term to de-risk production and lower costs in the future
• FY21 guidance 600 - 640,000ozs at an AISC of $1,300 - $1,400/oz; Flight to 800,000ozpa underway.

Notes:

1. Underlying NPAT stands for 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 financial year ended 30 June 2020. Underlying NPAT has not been subject to any specific review procedures by the auditor but has been extracted from the financial statements by the Company.
2. EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation and is a financial measure which is not prescribed by the International Financial Reporting Standards (IFRS). EBITDA has not been subject to any specific review procedures by the auditor but has been extracted from the financial statements by the Company.
3. Underlying EBITDA is a financial measure which is not prescribed by the International Financial Reporting Standards (IFRS) and represents the EBITDA, adjusted for specific items. The Directors believe that Underlying EBITDA is an appropriate measure to assist investors with their understanding of the Company’s operational performance in the financial year ended 30 June 2020. Underlying EBITDA has not been subject to any specific review procedures by the auditor but has been extracted from the financial statements by the Company.

--- click on links above for more ---

[I hold SAR shares.  Saracen is now Australia's 4th largest listed gold producer, behind NCM, NST and EVN.  I don't hold NCM, but I do hold the other 3.]

18-Aug-2020:  KCGM Reserves grow to 9.7Moz, output rising to plus 675kozpa

Also:  Saracen set for growth to 800kozpa

Saracen Mineral Holdings Limited Group Reserves, Resources and guidance

Saracen set for 800,000oz a year, underpinned by Reserves of 8.6Moz in Western Australia

FY21 group production guidance 600 - 640koz at AISC of A$1,300 - 1,400/oz

HIGHLIGHTS:

• Group Reserves at 30 June 2020 of 190Mt @ 1.4g/t for 8.6Moz 
• Group Resources at 30 June 2020 of 320Mt @ 1.7g/t for 17.0Moz
• FY21 group production guidance of 600 - 640,000oz at an AISC of A$1,300 - A$1,400/oz
• FY21 growth capital guidance of A$429m (gross); anticipated to be the peak year for investing in growth
• FY21 exploration guidance of A$55m
• Growth strategy aimed in part at capitalising on the strong gold price to "future-proof" the business; This strategy involves investing capital in the short term to de-risk production and lower costs in the future
• Group production steps up to ~700,000ozpa in FY24, before climbing to ~800,000ozpa in FY27

Saracen Mineral Holdings (ASX: SAR) is pleased to announce a new 7 year group production outlook, underwritten by 8.6Moz in Reserves at 30 June 2020.

--- click on links above for more - this is just a small excerpt from the second link ---

[I hold SAR shares]

04-Aug-2020:  Carosue Dam and Thunderbox only - Reserves rise to 3.7Moz

[I hold SAR shares]

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.

--- ends ---

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.

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.

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) 

--- click on link above for more ---

[Disclosure:  I hold SAR shares]

27-March-2020:  Trading update

19-Feb-2020:  SAR Investor/Corporate Presentation (February 2020): THERE’S NOTHING LIKE AUSTRALIAN GOLD

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.

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.

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.

28-Jan-2020:  Quarterly Activities Report (for quarter ending December 31, 2019)

and Quarterly Presentation

That Presso gives a very good overview of the business as it stands today - and I particularly like the wrap-up slide (page #24), which says:

• We have a simple business plan - We mine where we mill, within 300km of Kalgoorlie
• We deliver - 7 year track record of meeting or beating guidance, tracking ahead of FY20 guidance
• We have acquired 50% of the globally renowned Super Pit - Immediate step-change in cash flow generation
• We have an outstanding platform for growth - People, assets, balance sheet
• We are future proofing our business

Disclosure:  I hold SAR shares.  They are now one of Australia's top 4 gold miners, along with NCM, EVN & NST.  I also hold EVN and NST (+ SBM).