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Saracen Mineral share price on watch after exploration update

James Mickleboro
gold mining shares

The Saracen Mineral Holdings Limited (ASX: SAR) share price crashed lower on Friday after the gold price tumbled lower.

Investors will be hoping for better on Monday following the release of an exploration update this morning.

What was in the Saracen update?

According to the release, Saracen has had a strong start to its FY 2020 exploration campaign, with outstanding drilling results from Carosue Dam and Thunderbox.

Management believes the results highlight the substantial potential for further growth in mine life and production at both centres.

Saracen’s managing director, Raleigh Finlayson, was pleased with the exploration results and the significant growth potential they provide.

He said: “Our organic growth strategy continues to deliver exceptional returns on our investment by any measure. There is still immense potential to grow production and mine life at our assets, which also allows us to capitalise on our existing infrastructure. This combination of extremely low discovery costs and access to existing infrastructure ensures we generate outstanding returns on our capital, which is our overall objective.”

What about FY 2020?

Looking ahead, the Western Australia-based gold miner reconfirmed its guidance for FY 2020.

It expects FY 2020 group production of 350,000 ounces to 370,000 ounces at an all-in sustaining cost (AISC) of A$1,025 to A$1,075 per ounce. This compares to production of 355,000 ounces in FY 2019.

After which, the company is aiming to grow its production to 400,000 ounces per annum from FY 2021. This will be after the aforementioned Carosue Dam operation increases its production to 3.2Mtpa.

Though, a pipeline of further growth opportunities means there could be further upside to its longer term guidance.

Should you invest?

Whilst I think that Saracen is a great option in the gold industry along with Northern Star Resources Ltd (ASX: NST) and St Barbara Ltd (ASX: SBM), I would only be a buyer of its shares if you were confident that the gold price was going to improve.

The post Saracen Mineral share price on watch after exploration update appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019