Saracen Mineral Holdings has laid the foundations to become a 400,000 ounce per year gold producer off the back of increased investment in exploration and growth.
The company posted record gold production at its Western Australian mines in the 2019 financial year, up 12 per cent to 355,077 ounces at an all-in sustaining cost of $1030.
Saracen’s results, which coincide with a $217 million investment in exploration and growth, has managing director Raleigh Finlayson optimistic about the company’s year ahead.
“The combination of increased production and lower costs generated strong cashflow, as a result, we grew our cash holdings by $36 million over the year despite investing a record $217 million in exploration and development,” Finlayson said.
“This investment led to a 30 per cent increase in reserves, which is more than enough to support our target of producing 400,000 ounces a year for the next seven years, and we also have extensive resources which will help underpin further growth in production and mine lives.”
Finlayson said growth in earnings, production and mine lives remained a priority for Saracen and therefore the company had committed $50 million to exploration in financial year 2020.
He also noted that the company’s free cashflow generation was set to continue growing as it emerges from a period of heavy investment in exploration and development.
“Our priority remains exploration and growth, however our growing free cash flow and strengthening balance sheet will enable us to also begin paying dividends to shareholders,” Finlayson said.
“While we want to ensure we maintain a strong cash position to fund organic growth and acquisition opportunities we intend to return excess cash to our owners.”
Saracen’s positive financial year is highlighted by its financials, with the company’s net profit after tax surfing 22 per cent to a record $92.5 million.
Its revenue was also up nine per cent to $555.6 million, a return that could potentially rise further in the coming financial year as it strives to produce 400,000 ounces of gold.