Saracen Mineral Holdings Limited
SAR Details
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Production outlook: Saracen Mineral Holdings Limited (ASX: SAR) stock plunged over 11.15% on June 22, 2016 impacted by the ongoing decline in the gold prices due to easing fears of Brexit outcome. Meanwhile, Van Eck Associates increased its voting power from 8.58% to 13.22%. On the other side, SAR estimates that its production would double to ~300koz at AISC ~A$1075/oz which would boost its cash flow. Accordingly, the stock has already rallied over 145.3% in the last six months (as of June 21, 2016). On the other hand, we believe that today’s pressure in the stock would continue in the coming months while the group delivered a flat outlook for the subsequent years. Moreover, SAR is trading at very high P/E.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $1.275
Five-year production outlook (Source: Company Reports)
Evolution Mining Ltd
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EVN Details
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Higher levels: Evolution Mining Ltd (ASX: EVN) stock corrected over 5.7% on June 22, 2016 due to dropping gold prices and Van Eck Associates dropping its voting power from 7.2% to 6.01%. On. But, the stock rose over 63.9% in last six months (as of June 21, 2016) due to earlier recovery in gold prices coupled with positive exploration results and improving reserve base. The group recently reported that they witnessed a high Grade Gold at Edna Beryl West and accordingly planning for a big drill program.
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Recommendation: Trading a higher P/E, we give an “Expensive” recommendation on this low dividend yield stock at the current price of $2.14
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