Gold miners reap rewards of strong market

Strong gold prices and higher production levels have helped lift revenue at gold miners Saracen Mineral Holdings and Regis Resources, with Saracen’s net profit up 22 per cent to $92.5 million.

It comes as the Australian dollar gold price has smashed record levels, surpassing $2,000 per ounce earlier this year.

Saracen, which operates the Thunderbox and Carouse Dam mines in Western Australia, lifted revenue by 9 per cent to $219.5 million in the 2019 financial year.

Output was up 12 per cent to 355,100oz in the 12-month period, including a small amount purchased from third parties and processed through the Carouse Dam plant.

All-in sustaining costs also came down, from $1,139/oz to $1,030/oz.

On the back of this, Saracen announced a new dividend policy, with first payments expected in the 2020 financial year.

Up to 40 per cent of profits will be paid out in dividends in future, the company said.

Saracen managing director Raleigh Finlayson said production and profits had been at record levels.

“The combination of increased production and lower costs generated strong free cashflow,” he said.

“As a result, we grew our cash holdings by $A36 million over the year despite investing a record $A217 million in exploration and development.

“This investment led to a 30 per cent increase in reserves, which is more than enough to support our target of producing 400,000oz a year for the next seven years, and we also have extensive resources which will help underpin further growth in production and mine lives.”

Looking forward, the company has flagged $217 million of project development and exploration spending.

Shares in Saracen dropped 4.9 per cent to $3.72.

Golden years

At Subiaco-based Regis Resources, profit fell 6.4 per cent to $163.2 million.

Revenue was 8 per cent higher at $654.8 million.

Profitability had been reduced because of a $6.7 million impairment of capitalised exploration spending and a 17 per cent rise in costs of good sold to $401,970.

“The cost of goods sold increase is primarily due to a 34 per cent increase in (bank cubic metres) mined at Duketon South (primarily Tooheys Well), along with higher contractor costs and harder ore encountered at Duketon North (primarily Gloster),” the company said.

Regis managing director Jim Beyer said output had been at a record level.

Shares in Regis fell 5.2 per cent to $5.34.