Quarterly Report
Corporate Details:
22 July 2015
ASX code: SAR
Corporate Structure:
Ordinary shares on issue - 792.8m
Unvested employee performance rights -
7.3m
Market Capitalisation - A$293m
(share price of A$0.37/share)
Cash & Bullion (30 June) - A$44.9m
Debt (30 June) - Nil
Directors:
Mr Geoff Clifford
Non-Executive Chairman
Mr Raleigh Finlayson
Managing Director
Mr Mark Connelly
Non-Executive
Mr Barrie Parker
Non-Executive
Mr Martin Reed
Non-Executive
Ms Samantha Tough
Non-Executive
Substantial Shareholders:
Wroxby Pty Ltd 8.0%
Paradice Investment Management 7.8% Karara Capital Pty Ltd 5.6%
Eley Griffiths Group 5.3%
Registered Office:
Level 4
89 St Georges Terrace
Perth WA 6000
Telephone: +61 8 6229 9100
Facsimile: +61 8 6229 9199
For further details contact:
Troy Irvin Telephone +61 8 6229 9100 [email protected]
SARACEN MINERAL HOLDINGS LIMITED
ACN: 009 215 347
QUARTERLY REPORT: JUNE 2015
Record quarter, record year
Production
• Record quarterly gold production of 46,563oz
• Record full-year gold production of 167,531oz, comfortably exceeding guidance of 145,000 - 155,000oz
• Record quarterly all-in sustaining cash costs (AISC) of A$871/oz
• Record full-year AISC of A$1,139/oz, beating guidance of
A$1,150/oz
• Highly successful Whirling Dervish open pit completed
• Closing ore stockpile of 82,641 oz (~A$47m of deferred free cash flow at an AISC of ~A$861/oz)
• FY16 production outlook of 150-160koz at an AISC of A$1,025-
1,075/oz (Carosue Dam only)
Financial
• Record operational cash flow of A$36m (compared to A$21.6m the previous quarter)
• Cash and equivalents at 30 June of A$44.9m, an increase of
A$14.7m from 31 March
Exploration and growth
• Multiple high-grade drill results at Carosue Dam, including:
Karari - two new lodes discovered (Dhoni and A1)
Red October - extensional results 90m below the current decline and 180m below the October 2014 Ore Reserve
• 25% increase in total Mineral Resource at Thunderbox to 2.0Moz
(37.4Mt @ 1.7g/t), underpinning a potential >10 year mine life
• Best drill hole to date at Thunderbox project (55m @ 3.0g/t)
• Pre-strip mining commenced at the ~125koz Thunderbox project in early July
Corporate
• Experienced mining executive Mark Connelly commenced as a
Non-Executive Director on 1 May 2015
• Gold hedging of 280,717oz at an average price of A$1,520/oz
Health and safety
• One Lost Time Injury incurred during the Quarter, Lost Time Injury
Frequency Rate (LTIFR) of 2.0 below industry average of 2.5.
Summary
Table 1 - Carosue Dam Operations Statistics
Operations Units Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
FY
2015
Open Pit Mining
|
Total Mining BCM 1,840,000 1,422,000 919,000 505,000
|
4,686,000
|
|
Ore Mined t 920,000 937,000 875,000 735,000
|
3,467,000
|
|
Mine Grade g/t 1.23 1.48 1.69 1.86
|
1.55
|
|
Contained Gold oz 36,420 44,515 47,420 44,017
|
172,372
|
Underground Mining
|
Ore Mined t 79,000 79,000 68,000 119,200
|
345,200
|
|
Mine Grade g/t 6.23 8.43 6.08 4.77
|
6.22
|
|
Contained Gold oz 15,963 21,511 13,252 18,262
|
68,988
|
Total Mining
|
Ore Mined t 999,000 1,016,000 943,000 854,200
|
3,812,200
|
|
Mine Grade g/t 1.63 2.02 2.02 2.27
|
1.97
|
|
Contained Gold oz 52,383 66,026 60,672 62,279
|
241,360
|
Mill Production
|
Ore Milled t 587,000 602,000 549,000 576,000
|
2,314,000
|
|
Mill Grade g/t 2.17 2.45 2.58 2.77
|
2.49
|
|
Contained Gold oz 40,861 47,478 45,429 51,281
|
185,049
|
|
Recovery % 89.4% 90.3% 91.5% 90.8%
|
90.5%
|
|
Recovered Gold oz 36,525 42,894 41,550 46,563
|
167,531
|
AISC
AISC A$/oz $1,448 $1,191 $1,112 $871 $1,139
Figures 1-4 - Carosue Dam Operations Charts
60,000
50,000
40,000
30,000
20,000
10,000
0
Milling
3
2.5
2
1.5
1
0.5
0
75,000
60,000
45,000
30,000
15,000
0
Mining
2.50
2.00
1.50
1.00
0.50
0.00
Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
Recovered Gold Mill Grade
Contained Gold Mine Grade
50,000
Production & Costs
$1,600
100,000
Closing Ore Stockpile
2.50
40,000
$1,400
80,000
2.00
30,000
$1,200
60,000
1.50
20,000
$1,000
40,000
1.00
10,000
$800
20,000
0.50
0
Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
$600
0
Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
0.00
Recovered Gold AISC
Contained Gold Grade
2 | P a g e
Carosue Dam Operations
Processing
Table 2 - Carosue Dam Operations Processing Statistics
Carosue Dam Units Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
FY
2015
Mill Production
|
Ore Milled t 587,000 602,000 549,000 576,000
|
2,314,000
|
|
Mill Grade g/t 2.17 2.45 2.58 2.77
|
2.49
|
|
Contained Gold oz 40,861 47,478 45,429 51,281
|
185,049
|
|
Recovery % 89.4% 90.3% 91.5% 90.8%
|
90.5%
|
|
Recovered Gold oz 36,525 42,894 41,550 46,563
|
167,531
|
Mill throughput and head grade both increased during the Quarter compared with the March quarter, due to the increased mine production from the base of the Whirling Dervish open pit. Quarterly gold production of 46,563oz is the highest since operations commenced in 2010.
The closing ore stockpile available for processing at the end of the June quarter has increased to
2.34Mt @ 1.1g/t for 82,641oz. These ounces will only incur processing, administration and corporate costs, which is equivalent to ~A$861/oz AISC or A$47 million in deferred free cashflow using latest costs and a A$1,500/oz gold price.
Underground
Table 3 - Carosue Dam Operations Underground Mining Statistics
Operations Units Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
FY
2015
Underground Mining
|
Ore Mined t 79,000 79,000 68,000 119,200
|
345,200
|
|
Mine Grade g/t 6.23 8.43 6.08 4.77
|
6.22
|
|
Contained Gold oz 15,963 21,511 13,252 18,262
|
68,988
|
Table 3 includes underground production from:
• Karari (100% development) - June Quarter 2.7koz @ 2.6g/t (vs. March quarter 1.2koz @ 3.8g/t)
• Red October - June Quarter 15.6koz @ 5.5g/t (vs. March quarter 12.0koz @ 6.5 g/t)
The rapidly evolving Karari underground is on track for stoping to commence in the September quarter. Salient characteristics supporting production economics include:
• Multiple high grade lodes;
• Attractive mining widths;
• Shallow mineralisation (deepest intersection just 405m below surface);
• Proximity to the processing plant (~500m from the Carosue Dam mill); and
• A growing mineralised system.
A maiden Karari underground Ore Reserve is anticipated later in 2015.
3 | P a g e
Open Pit Mining
Table 4 - Carosue Dam Operations Open Pit Mining Statistics
Carosue Dam Units Sep Qtr
2014
Dec Qtr
2014
Mar Qtr
2015
Jun Qtr
2015
FY
2015
Open Pit Mining
|
Total Mining BCM 1,840,000 1,422,000 919,000 505,000
|
4,686,000
|
|
Ore Mined t 920,000 937,000 875,000 735,000
|
3,467,000
|
|
Mine Grade g/t 1.23 1.48 1.69 1.86
|
1.55
|
|
Contained Gold oz 36,420 44,515 47,420 44,017
|
172,372
|
The now-complete Whirling Dervish open pit posted a strong finish, delivering 44,017oz for the Quarter. The mine grade increased to 1.86g/t (10% higher than the March quarter) and the strip ratio declined to less than 1:1 (v 1.8:1 in the March quarter).
Total cash expenditure for open pit mining fell to $9.7m (forecast $11.0m) during the Quarter, with previous expenditure having fallen from $21.1m, $18.2m and $13.8m over the past three quarters as the mining fleet was reduced.
Figure 5 - Completed Whirling Dervish open pit (2 July 2015)
4 | P a g e
Thunderbox Operations
Pre-strip mining underway
Pre-strip mining commenced at the ~125koz Thunderbox project in early July.
The initiation of earth-moving at Thunderbox is a significant milestone that will see Saracen produce gold from multiple operations for the first time in its history. Importantly, this will realise Saracen's vision of joining the ranks of mid-tier gold producers. Production is targeted to double to ~300,000oz per annum within two years from the two operational centres at an AISC of
Resource upgrade to 2Moz
During the Quarter Mineral Resources at Thunderbox increased by 417,000oz to 2.0Moz.
The veracity of the updated Resource is underpinned by the fact that 1.5Moz, or 74%, of the updated estimate is in the Indicated category, which bodes well for a long mine life operation.
Figure 6 - Thunderbox long section, open down-plunge
For more information, please refer to the following ASX announcements:
• 23 March 2015 - "Thunderbox Project Feasibility and Development Approval"
• 30 March 2015 - "Thunderbox Feasibility Study - Additional Information"
• 14 May 2015 - "Thunderbox Resource Upgrade"
5 | P a g e
Exploration and growth
Thunderbox
A significant new area of high grade gold mineralisation has extended Zone "A". The deepest hole returned 55m @ 3.0g/t, ~165m down-plunge of the base of the proposed underground area. Additional results such as 38m @ 2.9g/t, 41m @ 2.5g/t and 38m @ 2.3g/t, illustrate the consistency. Zone "C" also delivered a number of promising down-plunge results, including 77m @ 1.8g/t.
This recent drilling highlights the potential for a mine life exceeding 10 years. Both Zones remain open down-plunge.
Carosue Dam - Karari
During the Quarter, two new lodes were discovered at the Karari underground - Dhoni and A1.
Drilling continues with two underground rigs, with the mineralisation remaining open down-plunge and to the south. The geometry of the mineralisation relative to the installed development enables drill testing of up to 400m of vertical extent, which has the potential to translate into >4 years of Reserves.
Subsequent to the Quarter, the Dhoni Lode returned an outstanding intersection of 23.4m @ 7.5g/t. Despite being the deepest drill intersection to date, the reported mineralisation is located just 405m below surface.
Carosue Dam - Red October
Ongoing extensional drilling confirmed narrow high grade mineralisation at depth (~90m below the current decline, ~180m below the Reserve). Significant intercepts included 0.5m @ 90.3g/t from
128m, 1.0m @ 41.6g/t from 102m, 4.0m @ 13.4g/t from 158m, and 0.3m @ 37.0g/t from 311m.
Carosue Dam - Blue Manna
High-grade drilling results have extended the known strike length of the shallow Blue Manna mineralisation to 380m. Significant intercepts included 24m @ 3.4g/t from 37m, 9m @ 6.9g/t from
38m, and 9m @ 6.3g/t from 57m. The mineralisation remains open in all directions.
First results from auger drilling highlighted gold anomalism in a number of previously untested areas north of Blue Manna.
Lake Carey
Regional exploration across Lake Carey has re-commenced with a systematic 48-hole aircore program, on Carosue Dam's northernmost tenement.
The drill program completed in June covers an area of 12km² of previously untested tenure. The area is adjacent to the major Celia Fault system, which is in the footwall to the late basin stratigraphy. A reinterpretation of the geophysics and geology in the area has highlighted a structurally complex zone with subtle magnetic lows indicating the potential presence of syenite intrusions. The prospective corridor lies between the Mt Margaret's field to the north and Butcher Well mineralisation to the south. Fresh rock bottom-of-hole samples have been submitted for multi-element analysis, which will provide data to constrain the lithogeochemistry and any large alteration signatures that may be present.
Results are pending.
6 | P a g e
For more information, please refer to the following ASX announcements:
• 29 April 2015 - "Thunderbox Exploration Update"
• 5 May 2015 - "Karari Exploration Update"
• 25 May 2015 - "Exploration Update - Karari & Red October"
• 10 June 2015 - "Blue Manna Exploration Results"
• 3 July 2015 - "Karari Project Drilling Results"
Corporate
Health & Safety
One Lost Time Injury ("LTI") was recorded during the June Quarter. Despite the LTI, the LTIFR is 2.0, below the industry average of 2.5. Significantly, the Total Incident Frequency Rate ("TIFR") has fallen to 336, a 25% improvement from 12 months ago.
Board & Management
Mark Connelly joined the Saracen Board as a Non-Executive Director on 1 May 2015. Mr Connelly has over 25 years' experience covering the development, construction and operation of mining projects across a variety of commodities and jurisdictions. Most recently he was Managing Director of Papillon Resources, where he played an instrumental role in the Company's US$570 million takeover by B2Gold Corp in October 2014. He has also held senior executive positions with Endeavour, Adamus, Newmont and Inmet.
Cash Position
As at 30 June 2015, Saracen's total cash position was A$44.9 million, comprising A$38.4 million held in cash and 4,316 ounces of gold in transit (approx. A$6.5 million at A$1,516/oz). There was no debt drawn at the end of the Quarter.
Hedging
As at 30 June 2015, Saracen had gold hedging in place totalling 280,717oz at an average price of A$1,520/oz. These ounces are to be delivered over the period from July 2015 to March 2019 (inclusive). Refer to Appendix 1 for the complete details of the hedge book.
Gold Sales
Gold sales for the Quarter were 44,002oz at an average sale price of A$1,552/oz for total revenue of A$68.3m. Note, gold sales excluded gold in transit. Of these sales, 27,762oz were delivered into hedging at an average price of A$1,564/oz.
7 | P a g e
Cash Flows
Figure 7 below shows the cash flow movement over the June Quarter.
Figure 7 - June 2015 Quarter cash movements
120
110
100
90
80
70
60
50
40 30
30
20
10
0
75 31
2 10
2 4 8
3 45
• Revenue: Revenue from gold sales (includes gold in transit)
• Cash Costs: Cash outflows for mining, ore cartage, processing, administration and ore purchase
• Reduction in Trade Creditors: Cash payments reducing the amounts owing to trade creditors over the quarter
• Sustaining Capital: Cash outflows for royalties, capital works, open pit development, underground development, active mine exploration & corporate expenses (including loan interest)
• Other Growth Capital: Capital expenditure on new projects
• Thunderbox: Includes expenditure on feasibility study, care & maintenance, development and exploration
• Karari Exploration Decline: Cash outflows for the development of the Karari exploration decline
• Exploration: Cash outflows for regional exploration and Red October exploration but excludes Thunderbox
Operational cash flow generated for the Quarter was a record $36.0 million (beating the previous record of $21.6 million in the March quarter) after taking into account all open pit and underground mining costs, ore haulage, processing and site administration expenses as well as royalties, sustaining capital and underground development.
Cash Costs
All-in Sustaining Cash Costs for the June Quarter were A$871/oz, a reduction of A$241/oz, or 22%, from the previous quarter's A$1,112/oz.
For the financial year, All-in Sustaining Cash Costs were A$1,139/oz, a reduction of A$376/oz, or
25%, from the previous year's A$1,515/oz.
"All in" cash expenditure fell $5.6 million to $40.6 million, mainly due to open pit mining costs falling by
$4.1 million as mining reached the base of the Whirling Dervish open pit.
8 | P a g e
Table 5 - Cash Costs
|
Cash Costs
|
Unit
|
Sep-14 Qtr
|
Dec-14 Qtr
|
Mar-15 Qtr
|
Jun-15 Qtr
|
FY 2014/15
|
|
Mining - Open Pit
|
A$m
|
20.6
|
18.2
|
13.8
|
9.7
|
62.3
|
|
Mining - Underground
|
A$m
|
6.8
|
5.1
|
5.7
|
8.0
|
25.6
|
|
Ore Cartage
|
A$m
|
1.2
|
1.6
|
1.2
|
1.5
|
5.6
|
|
Processing
|
A$m
|
12.1
|
12.0
|
11.6
|
10.1
|
45.8
|
|
Site Administration
|
A$m
|
2.0
|
2.3
|
2.0
|
1.6
|
7.9
|
|
Ore Purchase
|
A$m
|
-
|
-
|
-
|
-
|
-
|
Cash Costs A$m $42.6 $39.2 $34.4 $30.9 $147.1
|
Royalties
|
A$m
|
2.2
|
2.9
|
2.9
|
3.1
|
11.1
|
|
Capital Works
|
A$m
|
0.6
|
0.5
|
1.0
|
0.7
|
2.8
|
|
Open Pit Development
|
A$m
|
0.5
|
-
|
- 0.0
|
-
|
0.5
|
|
Underground Development
|
A$m
|
4.6
|
6.0
|
5.5
|
4.1
|
20.2
|
|
Active Mine Exploration
|
A$m
|
-
|
-
|
-
|
-
|
-
|
|
Corporate
|
A$m
|
2.4
|
2.6
|
2.3
|
1.8
|
9.1
|
"All in" Cash Costs A$m $52.9 $51.1 $46.2 $40.6 $190.7
|
Growth Capital
|
A$m
|
3.8
|
10.9
|
7.9
|
13.2
|
35.9
|
|
Exploration
|
A$m
|
3.0
|
2.0
|
2.9
|
3.4
|
11.3
|
Production (oz)
|
Mining - Open Pit
|
A$/oz
|
564
|
424
|
333
|
208
|
372
|
|
Mining - Underground
|
A$/oz
|
186
|
119
|
138
|
171
|
153
|
|
Ore Cartage
|
A$/oz
|
34
|
38
|
29
|
32
|
33
|
|
Processing
|
A$/oz
|
330
|
279
|
280
|
218
|
273
|
|
Site Administration
|
A$/oz
|
54
|
53
|
49
|
34
|
47
|
|
Ore Purchase
|
A$/oz
|
-
|
-
|
-
|
-
|
-
|
Cash Costs A$/oz $1,167 $913 $829 $663 $878
|
Royalties
|
A$/oz
|
61
|
67
|
69
|
67
|
66
|
|
Capital Works
|
A$/oz
|
16
|
11
|
25
|
15
|
17
|
|
Open Pit Development
|
A$/oz
|
13
|
-
|
- 0
|
-
|
3
|
|
Underground Development
|
A$/oz
|
126
|
140
|
133
|
88
|
121
|
|
Active Mine Exploration
|
A$/oz
|
-
|
-
|
-
|
-
|
-
|
|
Corporate
|
A$/oz
|
66
|
59
|
56
|
38
|
54
|
"All in" Cash Costs A$/oz $1,448 $1,191 $1,112 $871 $1,139
For further information please contact:
Investors: Troy Irvin
Chief Corporate Development Officer
[email protected]
Media:
Read Corporate
Paul Armstrong / Nicholas Read
[email protected]
Competent Persons Statements
The information in the report to which this statement is attached that relates to Exploration Results and Mineral Resources is based upon information compiled by Mr Daniel Howe, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Daniel Howe is a full-time employee of the company. Daniel Howe has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Daniel Howe consents to the inclusion in the report of matters based on his information in the form and context in which it appears.
The information on Mineral Resources and Ore Reserves has been extracted from the ASX announcement titled "2014
Mineral Resources and Ore Reserves" dated 9 October 2014. The report is available to view on the ASX Website at www.asx.com.au and on the Company's website at www.saracen.com.au.The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources and Ore Reserves, that all market assumptions and technical assumptions underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially
modified from the original market announcement.
9 | P a g e
Appendix 1 - Details of Hedging Contracts
|
Month
|
Ounces
|
Price A$
|
|
Spot Deferred
|
92,117
|
$ 1,414.31
|
|
31/07/2015
|
4,500
|
$ 1,700.00
|
|
28/08/2015
|
4,500
|
$ 1,700.00
|
|
30/09/2015
|
4,500
|
$ 1,710.00
|
|
30/10/2015
|
3,900
|
$ 1,710.00
|
|
30/11/2015
|
3,900
|
$ 1,720.00
|
|
31/12/2015
|
3,900
|
$ 1,720.00
|
|
29/01/2016
|
3,900
|
$ 1,720.00
|
|
29/02/2016
|
3,900
|
$ 1,730.00
|
|
31/03/2016
|
3,900
|
$ 1,730.00
|
|
29/04/2016
|
3,900
|
$ 1,740.00
|
|
31/05/2016
|
3,900
|
$ 1,740.00
|
|
30/06/2016
|
3,900
|
$ 1,750.00
|
|
30/09/2016
|
4,000
|
$ 1,520.00
|
|
30/10/2016
|
4,000
|
$ 1,520.00
|
|
30/11/2016
|
4,000
|
$ 1,520.00
|
|
31/12/2016
|
4,000
|
$ 1,520.00
|
|
30/01/2017
|
4,000
|
$ 1,520.00
|
|
27/02/2017
|
4,000
|
$ 1,520.00
|
|
31/03/2017
|
4,000
|
$ 1,520.00
|
|
30/04/2017
|
4,000
|
$ 1,520.00
|
|
29/05/2017
|
5,000
|
$ 1,520.00
|
|
30/06/2017
|
5,000
|
$ 1,520.00
|
|
31/07/2017
|
5,000
|
$ 1,520.00
|
|
28/08/2017
|
5,600
|
$ 1,520.00
|
|
30/09/2017
|
5,600
|
$ 1,520.00
|
|
30/10/2017
|
5,600
|
$ 1,520.00
|
|
30/11/2017
|
5,600
|
$ 1,520.00
|
|
31/12/2017
|
5,600
|
$ 1,520.00
|
|
30/01/2018
|
5,600
|
$ 1,520.00
|
|
27/02/2018
|
3,500
|
$ 1,520.00
|
|
31/03/2018
|
3,500
|
$ 1,520.00
|
|
30/04/2018
|
3,600
|
$ 1,520.00
|
|
29/05/2018
|
3,600
|
$ 1,520.00
|
|
30/06/2018
|
3,600
|
$ 1,520.00
|
|
31/07/2018
|
3,600
|
$ 1,520.00
|
|
28/08/2018
|
4,300
|
$ 1,520.00
|
|
30/09/2018
|
4,300
|
$ 1,520.00
|
|
30/10/2018
|
4,300
|
$ 1,520.00
|
|
30/11/2018
|
4,300
|
$ 1,520.00
|
|
31/12/2018
|
5,200
|
$ 1,520.00
|
|
30/01/2019
|
5,200
|
$ 1,520.00
|
|
27/02/2019
|
5,200
|
$ 1,520.00
|
|
31/03/2019
|
5,200
|
$ 1,520.00
|
|
Total
|
280,717
|
Avg $ 1,520.25
|
10 | P a g e