Saracen sets gold output record
Saracen Minerals delivered the pick of the mid-tier gold miners’ production reports on Tuesday, setting an output record.
Saracen Minerals delivered the pick of the mid-tier gold miners’ production reports on Tuesday, posting record production at its West Australian mines despite the impact of coronavirus operating restrictions.
That result was partly driven by the inclusion of a full quarter’s production from its half of the Kalgoorlie Super Pit, but the company’s Thunderbox mine also put in a strong performance and Saracen built its cash position $55m over the quarter despite spending $67m on growth projects, $14m on exploration and making a $25m early debt repayment.
Saracen beat its own production guidance for the quarter, with its mines producing 158,132 ounces for the period, at an average all-in-sustaining cost of $1133 an ounce. In late March it flagged group production of 150,000-155,000 ounces in the period.
The company said its gold sales generated $369m in revenue in the period, and posted an unaudited net profit after tax of $65m-$70m for the period.
Saracen said its operations suffered no material impact from state government restrictions over the coronavirus crisis, putting the company in stark contrast to its co-owner in the Kalgoorlie Super Pit, Northern Star Resources, which posted a big fall in output at its underground mines in WA and Alaska.
Northern Star said on Tuesday its mines produced 237,000 ounces in the March period, including 58,600 ounces from the Super Pit. In the December period, before it acquired the Super Pit, its group production was 212,571 ounces.
All-in sustaining cost across its operations rose almost 12 per cent, to $1590 an ounce.
Northern Star blamed the shortfall on restrictions imposed to limit the spread of the coronavirus in WA, saying it had taken time to adjust its underground operations to the new protocols.
“These mines rely on specialised skills and the roster changes, including longer and even-time rosters, require additional skilled personnel, who are in short supply,” Northern Star said on Tuesday.
“Towards the end of the quarter, the mining crew alone lost more than 1500 shifts, with unplanned leave up 80 per cent due to the strict health and safety operating protocols.”
Northern Star shares fell sharply late last month, when the company downgraded guidance for the March quarter by 10-15 per cent, blaming the impact of the coronavirus on its operations, deferred payment of its 7.5c interim dividend and said it was seeking to delay delivery of gold due to be delivered into hedging positions this financial year.
It finished the period with cash, bullion and investments worth $551m after completing the acquisition of the Super Pit and drawing down $200m from debt facilities. Its debt stood at $700m at the end of March.
JPMorgan analysts said Northern Star’s production figures were in line with its expectations, but costs were well above expectations.
St Barbara also failed to meet analyst expectations in its March quarter production report, delivering softer than expected production at both its Gwalia underground mine in WA and Simberi operation in Papua New Guinea.
St Barbara’s mines produced 91,547 ounces in the period, down from 94,159 ounces in the December quarter. AISC rose 3 per cent to $1405 for the period.
The company said it sold 98,707 ounces in the period, at an average realised gold price of $2123 an ounce. It finished March with $320m cash at bank after drawing down $200m in a syndicated debt facility, and said its operations delivered an $86m cash contribution in the quarter.
St Barbara shares closed down 10c at $2.47 on Tuesday, with Northern Star down 29c at $13.27, and Saracen off 2c at $4.54.