Raleigh Finlayson says the strong performance stemmed from exploration. Photo: Attila Csaszar

WA gold miners post profit surge

Wednesday, 22 August, 2018 - 14:40

Local gold producers Saracen Mineral Holdings and Silver Lake Resources have announced solid growth in profits for the 2018 financial year, while Western Australia-focused St Barbara also registered a positive result.

Raleigh Finlayson-led Saracen recorded underlying net profit after tax (NPAT) of $67.3 million for the year to June, double last year’s result of $33.7 million.

The company’s revenue increased 21 per cent to $511 million, driven by a 16 per cent rise in gold production to a record 316,453 ounces.

Saracen is ranked eighth on the BNiQ Search Engine's gold miners list

Saracen’s all-in sustaining costs also fell to $1,139/oz, down from $1,348/oz last year.

Cash and equivalents was $118.3 million at the end of the period.

“Profit and free cash flow surged as we grew production and reduced costs,” managing director Mr Finlayson said.

“This combination stemmed in part from our huge exploration success.

“This is the key to our ongoing growth and therefore we have committed $60 million to exploration in FY19.

“Continued growth in our inventory will underpin our push to become a 400,000oz/year producer with 10-year mine lives at both operations.”

Shares in Saracen were off 1.95 per cent at $1.91 each today.

Meanwhile, Silver Lake posted big increase in NPAT to $16.2 million, up from last year’s result of $2 million.

The company’s revenue rose 12 per cent to $255.5 million for the period, while gold production was up 16 per cent at 157,936oz with all-in sustaining costs of $1,289.

“The strong financial results for FY2018 are a reflection of the operational and exploration strategy pursued over the past two years at Mount Monger,” managing director Luke Tonkin said.

“Establishing three independent mining centres and diversifying our high-grade underground feed sources delivered a material increase in production and, more importantly, increased our cash operating margins.”

Despite the positive result for FY18, the company has forecast a rise in its AISC for next year to between $1,350/oz and $1,390/oz

The costs are associated with stockpiled low grade ore, which attracts a historical mining cost that is included in the AISC.

Silver Lake also said it expected to spend $12 million exploration in FY19.

Shares in the company finished the day down 4.85 per cent at 49 cents each.

Melbourne-based St Barbara also recorded a rise in profit, with underlying NPAT up 26 per cent to $202 million in FY18.

The company posted record group production of 403,089oz from its Gwalia and Simberi mines at an AISC of $891/oz.

“For the fourth year in a row the company has achieved record production and costs from Gwalia and Simberi combined,” managing director Bob Vassie said.

“The strong performance delivered a record cash contribution from operations, and enables us to provide shareholders with an 8 cents per share fully franked final dividend.

“We continue to build out the growth pipeline through the Gwalia extension project, further study work on Gwalia mass extraction and the Simberi Sulphides, increasing our exploration spend and adding investments in exploration juniors.

“In addition, our strong balance sheet allows us to pursue inorganic growth opportunities.”

St Barbara shares rose 2.76 per cent to $4.10 each today.