Strong cash and equivalents position reflects a key milestone achieved for the first time: Saracen Mineral Holdings’ stock surged over 5.57% on April 17, 2018 at the back of the strong March quarter update owing to which the group has now upgraded its FY18 guidance given the record production and cash and equivalents rise of 22% to A$102m. Particularly, the group indicated its FY18 guidance to rise to 310-315,000oz at AISC A$1,100 - 1,150/oz against the previously stated 300,000oz at A$1,150/oz.
SAR’s quarterly mine production of 98,886oz with Carosue Dam reporting 44,329oz and Thunderbox reporting 54,557oz has been healthy, while the group reported quarterly all-in sustaining cash costs (AISC) of A$1,181/o. Quarterly mill production of 79,727oz with higher contribution from Carosue Dam was another key aspect. SAR continued with milling of high-grade Kailis ore (Thunderbox) wherein grade and ounces exceeded expectations. Closing ore stockpile of 57,026oz (up 34% from 37,834oz at December 31) has been another key update to note. The group has spent A$11.5m on growth capital and exploration and the gold sales for the quarter of 81,351oz at an average sale price of A$1,584/oz, led the revenue to touch A$128.8m. The group also added a hedging of 82,700oz at A$1,771/oz while 59,300oz of hedging was delivered at A$1,550/oz.
At the back of the encouraging result, SAR has established a 7-year production outlook with growth to 350kozpa (base case) and 400kozpa (upside case). The developments at Thunderbox underground drill platform that are to commence in June quarter, drilling at Carosue Dam, updates from Karari, and Whirling Dervish along with new discovery at Old Camp (Butcher Well, AngloGold earning up to 70%) are expected to pave the path for the long-term growth profile. Given the run-up and the trajectory being established, we have a “Hold” on the stock at the current price of $ 1.895.
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Production Profile (Source: Company Reports)
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