- Saracen Mineral Holdings (SAR) is the latest ASX 200-lister to report a strong half-year of profits
- In its latest financial report, the gold miner said profits almost doubled compared to the same time the year before
- Underpinning the growth was a record half-year of gold production for the company, bolstered by the recent purchase of the KCGM Super Pit in Kalgoorlie
- Saracen, however, is working on paying off debt before declaring any dividends
- Still, shares in the company increased by nearly three per cent today, currently trading for $4.25 each
Reporting season has been kind to the materials sector today, with Saracen Mineral Holdings (SAR) the latest ASX 200-lister to report some strong profit growth.
The big-cap gold miner told shareholders today profits for the half-year from July to December 2019 came in at $80.2 million on an underlying level — almost double the $43.5 million from the same period in 2018.
Taking into account one month’s worth of costs from operating the Kalgoorlie Consolidated Gold Mines (KCGM) Super Pit, statutory profits still ended the half-year at $69.1 million compared to 2018’s $43 million. Saracen bought a 50 per cent interest in the Super Pit in November last year for a hefty US$750 million (A$1.1 billion).
Supporting the hefty profits is a 45 per cent boost to company sales revenue. Over the half-year, Saracen sold off 206,000 ounces of gold for an average price of $1984 per ounce — bringing total sales revenue to $409. The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the half-year came in at $178.6 million, which is 71 per cent higher than the year before.
The sales and profit growth were underpinned by Saracen’s record gold production for the half-year, with the Super Pit helping the company produce 216,452 ounces of gold in half a year. With this, the company is on track to meet its production guidance of more than half a billion ounces of gold for the 2020 financial year.
Managing Director Raleigh Finlayson said the growing production and inventory is the reward of “aggressive” near-mine exploration and shrewd acquisitions.
“With the addition of the Super Pit and the Carosue Dam mill expansion set for commissioning in the December quarter, our production and cash flow is poised to continue growing,” Raleigh said.
“We are also looking forward to the results of the review we are undertaking at the Super Pit, which is a world-class asset with an exceptional future,” he said.
However, shareholders may have to wait a bit longer to reap rewards from the company in the form of dividends. Raleigh explained the company is trying to keep a conservative balance sheet and reduce debt as much as possible.
As such, he said, the $4.7 billion-market-cap company is not paying out a dividend to shareholders just yet.
“In line with our stated policy, the Board will revisit this matter at the end of the financial year,” Raleigh said.
Still, investors seem pleased enough with the strong production and sales results in the meantime. Shares in Saracen are up 2.91 per cent in mid-afternoon trade, trading at their highest point since August 2019 and worth $4.25 each.