The Saracen Mineral Holdings Limited (ASX: SAR) share price is up 4.24% this morning as the gold miner provided a business update on its recent performance in light of the growing coronavirus crisis.
Despite the stock market crash on the S&P/ASX 200 Index (ASX: XJO), the gold miner has proved to be a strong share price performer over the past 12 months, up 25.6% despite volatile movement in recent weeks. Saracen had a strong first half for FY 2020, reporting an 84% increase in underlying net profit after tax to $80.2 million.
Strong March quarter production
Saracen revealed today that it is still on track to achieve record production for the March quarter across its group of between 150,000 and 155,000 ounces, with minimal impact being seen from the coronavirus outbreak so far. This compares to a total of 216,452 ounces achieved for the 6 months to December last year.
The ASX gold miner, however, does acknowledge that it is unclear whether or not operations will be impacted during the coming June quarter.
Saracen noted that at this stage, it won't be withdrawing its FY 2020 guidance, but will continue to review this decision as the coronavirus crisis further unfolds.
Operations update
Saracen will slightly delay the commissioning of its Carosue Dam mill until the March quarter of 2021. The gold miner noted that it can draw on large ore stockpiles for milling if necessary, providing a buffer for the business if its mining operations are further restricted.
The company has also decided to defer all discretionary expenditure including all greenfields exploration in light of the crisis.
Strong underlying balance sheet
Saracen noted that it has a strong underlying balance sheet with total estimated cash and bullion of between $325 million and $330 million on its books as at the end of March. Meanwhile, total debt stands at a very manageable $360 million.
However, despite its relatively strong financial position, Saracen is discussing ways that it could potentially gain further financial flexibility. This includes drawing on a revolving debt facility and possibly delaying debt repayments if required.
Commenting on today's update, Saracen Managing Director Raleigh Finlayson said: "The controls and restrictions we have put in place in recent weeks are likely to impact our mining production rates in the coming quarter. At this stage, with the benefit of substantial ore stockpiles, we expect the impact to be limited on mill production, but we will ensure we keep all stakeholders informed if and when circumstances change in the future."
"It may also become necessary to implement further measures, which we will do without hesitation if circumstances require," he added.
