Kalgoorlie Super Pit owners Saracen and Northern Star have reported a surge in profits for the full financial year, on the back of record production and a strong gold price.
Kalgoorlie Super Pit owners Saracen Mineral Holdings and Northern Star Resources have reported a surge in profits for the full financial year, on the back of record production and a strong gold price.
It comes after both companies completed a strategic review of the Super Pit, confirming it as a long-life asset with reserves of 9.7 million ounces of gold.
Saracen, which yesterday said its overall reserves had increased to 8.6moz, said its underlying net profit after tax (NPAT) had more than doubled in the 12 months to June 30, rising to $257.5 million, compared with $94.2 million for the prior financial year.
Its underlying earnings rose 104 per cent to $448 million for FY20, which Saracen said reflected record gold production, steady costs, and a strong gold price.
The company produced record gold output in FY20 of 520,414oz, up 47 per cent on the prior year, at an all-in sustaining cost (AISC) of $1,101/oz.
Its gold sales had also increased, generating revenue of $1.074 billion, up 93 per cent.
Managing director Raleigh Finlayson said FY20 was a landmark year for the company, which had transitioned to the big league of ASX-listed gold producers.
“Our production rate is now running at +600,000oz a year and our cost base is still tight,” he said.
“This means we are perfectly positioned to capitalise on the strong gold price and continue generating strong growth in our cash flow.”
Mr Finlayson said the company had a robust balance sheet of $48 million, which would fund further exploration and development efforts in Western Australia.
He said the state, as a tier-one location, added certainty to the outlook for the business.
Saracen, which had previously committed to paying a final dividend if its cash balance exceeded $150 million, said it would not proceed with a payout in light of having borrowed $400 million to help fund the acquisition of a 50 per cent stake in the Super Pit.
The target payout ratio remains unchanged of between 20 and 40 per cent of NPAT.
Saracen ended the financial year with cash and bullion of $369 million and debt of $321 million, along with a market capitalisation of $6.4 billion.
The company was trading 4 per cent lower at 2:25pm AEST to $5.52 per share.
Fellow Super Pit owner Northern Star Resources said it would proceed with a fully-franked, final dividend of 9.5 cents per share, along with a special 10 cent dividend, on the back of a strong financial and operating position.
That includes record profit, with Northern Star reporting a 69 per cent rise in underlying NPAT in the 12 months to June 30 to $291 million.
The company said its strong financial performance was reflected in its underlying free cash flow of $423.1 million in FY20, up 190 per cent on FY19.
Northern Star said it expected cash flow to continue to rise, given the spot price had reached $2,750/oz, up by more than $500/oz in FY20.
Executive chair Bill Beament said Northern Star also had a growing production profile and one of the lowest capital intensity in the industry.
“We have resources of almost 32moz, including reserves of 10.8moz, in tier-one locations and we are generating strong organic growth as the result of our investment in exploration and development," he said.
“We also have a pipeline of future growth opportunities in and around other assets and infrastructure, which will help us drive ongoing increases in cashflow while maintaining our superior financial returns.”
Northern Star will pay its final and special dividends on September 30.
The company ended the financial year with cash, bullion and investments of $769.5 million at June 30, and with debt of $700 million (paid down to $500 million last month).
Its shares were down 2.4 per cent at 2:25pm AEST to trade at $14.63 each.
