St Barbara Ltd
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SBM Details
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Decreased production guidance: St Barbara Ltd (ASX: SBM) stock fell over 9.4% on July 21, 2016 with fluctuating gold prices and investors taking profits at the back of the group’s announcement on decreased guidance for fiscal year of 2017. SBM delivered its consolidated production of 386 koz which is on higher end of its FY16 guidance of 369 to 384 koz, as compared to the FY15 production of 377 koz. Moreover, SBM decreased its AISC to A$933/oz in fiscal year of 2016 as compared to A$1,007/oz in fiscal year of 2015. On the other hand, the group decreased the fiscal year of 2017 Production in the range of 340 - 370 koz. The group issued a higher forecast range for AISC in the range of A$985 –A$1,075 /oz. SBM already generated over 133.9% returns (as of July 20, 2016) during this year to date due to solid gold rally, placing the stock at higher levels.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $3.00
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Production performance (Source: Company Reports)
Saracen Mineral Holdings Limited
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SAR Details
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Solid performance but higher levels: Saracen Mineral Holdings Limited (ASX: SAR) stock plunged over 9.7% on July 21, 2016 with gold price weakness. The group reported a solid quarterly gold production of 63,192oz (with Carosue Dam contributing 41,037oz, and Thunderbox contributing 22,155oz). Quarterly all-in sustaining cash costs (AISC) reached A$1,151/oz. Consequently, SAR gold production for fiscal year of 2016 reached 188,656oz, (with Carosue Dam accounting 157,191oz, and Thunderbox accounting 31,465oz). Meanwhile, the group reported that the commercial production declared at the A$63 million Thunderbox project (effective 1 April 2016) is four months ahead of schedule. The group acquired the Norilsk royalty (1.5% NSR) which would cut Thunderbox’s life of mine AISC to ~A$1,000/oz. On the other side, SAR stock already generated over 139.4% in the last six months (as of July 20, 2016) on the back of sharp surge in gold prices, leading to solid group’s performance. But SAR is already trading at unreasonable P/E.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $1.535
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SAR Performance (Source: Company Reports)
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