The Saracen Mineral Holdings Limited (ASX: SAR) share price will be one to watch this morning following the release of its full year results.
Shareholders will no doubt be hoping that its record profit result offsets weakness in the gold price on Friday.
What happened in FY 2019?
For the 12 months ended June 30, the gold miner reported a 9% increase in revenue to $555.6 million and a 22% lift in net profit after tax to a record $92.5 million.
On an underlying basis net profit after tax rose a sizeable 40% to $94.2 million. The underlying result represents the net profit after tax under International Financial Reporting Standards, adjusted for specific items such as the expensing of explorations costs and profits or losses on the sale of assets.
The strong result was driven by a 12% increase in production to a record of 355,077 ounces, a 9.5% reduction in all-in sustaining costs to $1,030 an ounce, and a solid rise in the gold price in Australian dollars.
Saracen finished the period with cash and equivalents of $154.4 million, compared to $118.3 million 12 months ago. Impressively, this was despite the company spending $216.9 million on exploration and growth.
This strong balance sheet led to the gold miner announcing an inaugural dividend policy targeting a payout equal to 20% to 40% of its net profit after tax. This is subject to it reaching and maintaining a minimum cash balance of $150 million and will apply from FY 2020
Saracen's managing director, Raleigh Finlayson, said: "We have met or exceeded all our key guidance metrics, generating record production and profits in the process. The combination of increased production and lower costs generated strong cashflow. As a result, we grew our cash holdings by A$36 million over the year despite investing a record A$217 million in exploration and development."
Adding: "This investment led to a 30 per cent increase in Reserves, which is more than enough to support our target of producing 400,000oz a year for the next seven years, and we also have extensive Resources which will help underpin further growth in production and mine lives."
I thought this was a strong result from Saracen and feel it could be a good option for investors looking for alternatives to heavyweights Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) in the gold industry.
