Saracen Mineral Holdings Limited (ASX:SAR) mid tier gold producer from humble beginnings

Interviews

TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH SARACEN MINERAL HOLDINGS LIMITED (ASX:SAR) MANAGING DIRECTOR, GUIDO STALTARI

Joining me from mid-tier gold producer Saracen Minerals (ASX:SAR) is Managing Director, Guido Staltari. Guido welcome to FNN. Could you start by briefly introducing Saracen Minerals?


Guido Staltari: Saracen is a company that has come from humble beginnings, approximately five or six years ago. Previously a publishing company and after a sale of its publishing assets, it turned its direction to exploration and mining and that’s when I got involved. At that stage it was a company capitalised at barely $2 million with 2 employees and today it’s a company capitalised at around $350 million, with more than 300 employees and contractors working for the Company.

So how many ounces are you producing?

Guido Staltari: Within this current financial year, we will have produced approximately 115,000 ounces as our maiden year’s production.

And when did you list?

Guido Staltari: The Company listed approximately – as a media company, approximately fifteen years ago but we relisted. We reapplied for admission as an explorer and miner approximately six years ago.

Okay now for investors not familiar with your stock, where’s your share price and what’s your market cap?

Guido Staltari: Okay at the moment our share price is just under 70 cents per share. We have approximately 500 million shares on issue and therefore, a market cap of around about 350 million.

Your projects are located north-east of Kalgoorlie. What was production last quarter and what are you forecasting for the 20011/12 financial year?

Guido Staltari: During the last quarter we produced around 27,000 ounces, slightly ahead of our budget and for the forthcoming financial year 2011/12, we’ll produce around 120,000 ounces of gold.

Thanks Guido. So what’s the size of the resource and the mine life?

Guido Staltari: The resource at the moment is around about 3.3 million ounces with an ore reserve presently stated at just under 1 million ounces. On our current production schedule or current production rate I should say, we are a company with about a seven to eight year life. But we expect those numbers to change markedly in the next couple of years as we invest in our exploration programmes.

Turning to your drilling programme now starting with Karari and Whirling Dervish, both located near the Carosue Dam operation. What’s the latest?

Guido Staltari: The latest on Whirling Dervish & Karari is that we have an RC and diamond drilling programme presently in progress. The purpose of that programme is to chase the main ore zones to greater depth with a view to potentially launching a further expansion of the open-cuts, as well as the possibility of underground mining on some of the high grade zones. And that programme will be an ongoing programme throughout this year.

So based on these results, how many ounces does it contain?

Guido Staltari: Presently the two deposits together contained around about 1.1 million ounces in resources and naturally we are targeting an increase in that with our drilling.

So what’s the programme for the rest of the year?

Guido Staltari: Well for the rest of the year we’ll be continuing of course with our drilling. Our drilling is always in stages, assessing the results as we go and then planning our next round accordingly. And a series of engineering updates with a view to planning pit expansions and of course, the underground phase.

Okay now you’re also active further north in the Laverton tectonic zone. What have you found?

Guido Staltari: Yes we are active up here; this is in the northern part of our extensive lease holding and this is where it gets very exciting. We’ve got three significant gold deposits in this region which are undeveloped – Butcher Well, Red October and Deep South. In particular Red October is arguably the most exciting gold prospect in Australia at the moment.
Previous drilling has intersected very, very rich gold grades up to 4 ounces per tonne. And we are currently embarking on an underground development programme with dewatering of the previous open-pit and the underground development, which should take place in the latter part of this year and next year - very exciting.

Great, now moving to your financials. What was your latest half year result? 

Guido Staltari: In the latest half year, we posted a profit of just under 30 million which was a fantastic result in our maiden half year. And for the full year, I expect a result of roughly somewhere in the order of $40 to 45 million net profit, which also will be a landmark result for the Company.

And your cash position?

Guido Staltari: Currently we have around $35 million in cash and no debt.

And will you need to raise funds this year?

Guido Staltari: We are not looking at all at fund raising. We’ve got substantial cash flows coming from the operation. We have available debt facilities should we need them, not that we foresee needing them and we’re in a pretty good position. Of course should we identify a major project on the way i.e. a good problem, then funding will be an issue but I think that’ll be a very good problem for us to have.

Absolutely. So finally Guido, what does the next six to twelve months hold for Saracen Minerals?

Guido Staltari: Very exciting period for us. We have in the past four years concentrated largely on the production discipline of equipping the Company with the resources – the financial and human resources and launching our production operations. In that period we haven’t been as active on the exploration front, this is our first year of serious exploration. We’ll be spending something in the order of $12 million, that programme has already commenced and we have high hopes for that work.

Guido Staltari thanks for the update and good luck.

Guido Staltari: Thank you.

ENDS
 

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