Saracen Minerals Emerges from Trading Halt (ASX:SAR)

The Perth based gold miner recently placed itself in a short-term trading halt on the ASX.

At time of writing, the Saracen Mineral Holdings Ltd [ASX:SAR] share price is down 2.68%, trading at $6.09. Just shy of an all-time high.

ASX SAR Share Price Chart - Saracen Shares

Source: Optuma

Why Saracen went into a trading halt

In a previous announcement, the company released details on a record year of production and cash flow.

Here are the highlights:

  • Record FY20 production of 520,414oz (KCGM 50% 132,595oz, Carosue Dam 203,281oz Thunderbox 184,538oz), ahead of FY20 guidance of +500,000oz
  • Gold sales for the quarter of 148,011oz at an average sale price of A$2,280/oz for sales receipts of A$337.5m (72,300oz delivered into the hedge book at an average price of A$1,938/oz)
  • Cash and bullion of A$369.3m at 30 June 2020 (A$338.8m at 31 March 2020) after making a debt repayment of A$38.5m, paying A$15.7m tax, and spending approximately A$89-94m on growth capital and exploration in the June quarter

This helped push the company to record an all-time high and a market cap of $6.6 billion.

Then, a trading halt was implemented.

Subsequent to the end of the trading halt, the company broke the saddening news of a fatality at their Dervish mine site in Western Australia. With Saracen Managing Director Raleigh Finlayson stating:

The health and safety of our people is always our priority. Saracen is currently working closely with the WA Department of Mines, Industry Regulation and Safety on the continuing investigation.

The company then announced that production had resumed at its Carosue Dam Operations, with Saracen reviewing principal hazards and controls, conducting workplace inspections and audits.

Where to from here for Saracen share price

Let’s take a look at the SAR share price chart:

ASX SAR - Saracen Share Price 2

Source: Optuma

With the price sitting at $6.09, if the up trend continues, the levels of $6.25 and $6.55 may provide future resistance, interesting to note, the current move up took place on strong volume.

On the downside if price were to retrace then the levels of$6.70 and $4.70 may be the levels to catch the fall.

The price of gold in USD terms just broke through the $1,800 mark and the price of gold in AUD terms may retest the $2,720 mark in the coming weeks if the AUD weakens.

This would bode well for the SAR share price.

Finally, ever wondered what it takes to pick winning gold stocks? You can read the in-depth report on the topic right here. In it, our editor Greg Canavan takes you through the process with unique insights into how to value gold mining companies.

Regards,

Carl Wittkopp,

For Money Morning


Carl Wittkopp writes for The Rum Rebellion and has a diploma in Financial Planning. He specialises in the technical analysis of stocks.


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