The Saracen Mineral Holdings Ltd (ASX: SAR) share price could jump today following the release of its June quarterly report this morning showing that it met FY19 production guidance and beat cost guidance. Here’s what you need to know.
About Saracen
Saracen is one of the larger gold miners listed on the ASX with an annual production of more than 300,000 ounces per year from its Carosue Dam Operation and its Thunderbox operation.
Here Are The 5 Key Points
- June quarterly gold production of 88,096 ounces with All-In Sustaining Costs (AISC) of $1,026 per ounce
- The Thunderbox operation delivered a record quarter with AISC falling to $897 per ounce
- June half unaudited net profit after tax (NPAT) of $47 million to $50 million
- Group FY19 production of 355,077 ounces at an AISC of $1,030 per ounce, meeting increased FY19 guidance
- FY20 production guidance increased to 350,000 to 370,000 ounces at an AISC of $1,025 to $1,075 per ounce
Other Results
Cash and cash equivalents increased from $153.3 million at 31 March to $154.5 million at 30 June 2019. Total gold sales for the quarter was 90,230 ounces at an average price of $1,754 per ounce, creating revenue of $158.3 million.
Saracen spent a record $64.4 million on growth capital and exploration during the quarter in an attempt to grow reserves and mine life to support production of 400,000 ounces per year.
Management Commentary
Saracen Managing Director Raleigh Finlayson highlighted the consistency of Saracen’s results, saying, “our production and cost base is consistently in line with, or better than, our guidance.”
“The combination of reliable production and low costs gives investors an outstanding opportunity to capitalise on the strong gold price while minimising the operational risks.”
Is Saracen A Buy?
Saracen has benefitted from low costs and reliable production in FY19, but the company has also been boosted by a rising gold price. In fact, the gold price is currently sitting around its 52-week high.
While the Saracen results are encouraging, a falling gold price could heavily impact revenue and profit and there’s little Saracen could do about it. I tend to avoid commodity-based businesses for that reason.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
