On 29th January 2020, the benchmark index S&P/ASX200 was trading in green with a rise of 0.6% at 7038.5 points (at AEDT 3:33 PM). In the below article, we will look at the performance of two metals and mining companies such as Saracen Mineral Holdings Limited and Nickel Mines Limited that have updated the market with their activities for December 2019 quarter period.
Saracen Mineral Holdings Limited (ASX: SAR)
Australia based Saracen Mineral Holdings Limited (ASX: SAR) is engaged in the mining of gold, processing & sales and exploration of mineral. The company was officially listed on Australian Securities Exchange in 1989. The company recently announced that Mitsubishi UFJ Financial Group, Inc. has ceased to be a substantial holder in the company, effective 27th December 2019.
On 28 January 2020, SAR notified the market with the report of December quarter for the period closed 31 December 2019 and outlined the following:
For the period, the company reported quarterly gold production of 120,127 ounces with an AISC (All in Sustained Cost) amounting to $1,098 per ounce. Moreover, at Thunderbox, the company experienced record quarter with production noted at 46,594 ounces as the C Zone open pit mine reported higher grade / lower strip ratio ore as per the plan of the company.
SAR added that the Carosue Dam has experienced the production of 52,899 ounces and KCGM produced 20,634oz for the month of December 2019.
- During the quarter, the company completed an acquisition of Barrick's 50% interest in the Super Pit gold mine for the consideration amounting to US$750 million.
- Also, the company and its JV partner Northern Star Resources Limited (ASX: NST) have taken a step-to agree for a joint operatorship model, set up a new management structure as well as initiate an extensive strategic review or optimisation process.
- For this new structure, both partners in the joint venture have formed the KCGM Executive Committee. The committee comprises of 2 representatives each from SAR and Northern Star and agreed joint operatorship of the mine.
- During the period, gold sales stood at 117,575oz at an average sale price of $2,034 per ounce, which the led the company to generate revenue amounting to $239 million. For the quarter, the net mine operating cashflow stood at $91 million.
- Post making the payment of US$750m in consideration for the 50% of the Super Pit gold mine in Kalgoorlie, and making another payment of $10 million for Sinclair, SAR raised $796 million in equity, drawing $400 million in debt as well as early payment of debt amounting to $15 million, the cash and equivalents of SAR stood at $283.8 million, as on 31st December 2019.
- Debt repayment has been supported by robust forecast cashflow from the Super Pit, Carosue Dam as well as Thunderbox.
- On the outlook front, the company is expecting group production for FY20 and FY21 of more than 500koz and 600koz, respectively. Also, the company currently has annualised production, which is surpassing 600,000 ounces, long mine lives supported by well-known inventories as well as broad scope for continuing natural expansion. The company is very well-positioned to deliver strong, sustainable returns throughout the cycle on the back of scale, longevity and growth.
Also read: A walk-through ASX-listed gold companies
The stock of SAR was trading at $3.950 per share on 29th January 2020, with a rise of 3.476% as compared to its previous closing price. The company has a market capitalisation of $4.27 billion as on 29th January 2020. The total outstanding shares of the company stood at 1.1 billion, and its 52-week low and high is $2.423 and $4.659, respectively. The company has generated a total return of 7.51% and -3.53% in the time span of three months and six months, respectively.
Nickel Mines Limited (ASX: NIC)
Australian public entity, Nickel Mines Limited (ASX: NIC) is engaged into nickel mining with a focus on becoming a globally significant, low cost producer of nickel pig iron, which is a key ingredient in the production of stainless steel.
The company recently announced that BlackRock Inc. and subsidiaries made a change to their substantial holdings in the company on 14th November 2019 and BlackRock’s current voting power stands at 8.32% as compared to the previous voting power of 9.93%.
Also, NIC on 28 January 2020, notified the market with the activities of the company during the December quarter for the period closed 31 December 2019 and outlined the following:
- The company has experienced record nickel production at Hengjaya Nickel and Ranger Nickel RKEF projects. RKEF production stood at 10,968.3 tonnes of nickel metal (100% basis), reflecting a rise of 9.5% from 10,019.6 tonnes of nickel metal in September quarter.
- The attributable nickel production of the company stood at 6,580.9 tonnes of nickel metal, with a rise of 27.5% from 5,161.0 tonnes of nickel metal in September 2019 quarter.
- RKEF quarter sales witnessed a rise of 20.4% and reached US$141.1M (100% basis), from US$117.2 million in September quarter (Q1 FY20).
- At the end of quarter, cash, receivables and inventory collectively stood at US$190.6 million, showcasing a rise of 23.2% from US$154.7 million of Q1 FY20.
- At 31st December 2019, the group had trade receivables amounting to US$86.7 million, which comprises of (1) US$45.4M held by Hengjaya Nickel, (2) US$39.1M held by Ranger Nickel and (3) US$2.2M held by Hengjaya Mine.
- The company also added that a number of key expansion activities as well as operational restructuring initiatives have continued during the December 2019 quarter for supporting the Hengjaya Mine’s plan to significantly increase production in 2020 period.
On 29 January 2020, NIC provided an update to the market in concurrence with Shanghai Decent (its operating partner) with regards to address the concerns on the eruption of the Wuhan Coronavirus and conjecture of its effects on NIC’s RKEF operations at the IMIP or Indonesia Morowali Industrial Park in Sulawesi (Indonesia).
The update comprised of IMPI executing stern access controls to itself from 26 January this year. All non-Indonesian are at present barred from entering IMPIP unless special situations needs their admission. Also, rostered leave for the Chinese employees has been suspended at present.
The stock of NIC was trading at $0.622 per share on 29th January 2020, with a rise of 1.967% (at AEDT 3:25 PM). The company has a market capitalisation of $1.02 billion as on 29th January 2020. The total outstanding shares of the company stood at 1.67 billion, and its 52-week low and high is $0.285 and $0.750, respectively. The company has generated a total return of 7.09% and 27.10% in the time span of three months and six months, respectively.
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