Saracen Minerals Holdings (SAR:ASX)

Last update - 1 December 2020 By Rivkin

Saracen Mineral Holdings (SAR) operates as a holding company, operating through its subsidiaries to explore and mine gold and other materials, serving customers in Australia.

Key Statistics
52-Week Range	Avg. Daily Vol (3 Mo)	Market Value	Dividend Yield	Float %	Target Price	Consensus Rating (5 strong buy – 1 strong sell)	Next Earnings Announcement
2.81 – 6.75	10,140,100	5,372.00	-%	99.0%	6.26	3.40	17/02/2021

The company operates its 100% owned Carosue Dam and Thunderbox projects as well as a 50% share alongside Northern Star Resources (NST) in the Super Pit located near Kalgoorlie in Western Australia.

In October Saracen Minerals (SAR) and Northern Star Resources (NST) announced to a A$16 billion merger-of-equals, creating a top-10 global gold company. Via a scheme or arrangement NST will acquire 100% of Saracen shares in exchange for 0.3763 NST shares. Additionally, SAR will pay a special fully franked dividend of A$3.8c per share, conditional on the scheme becoming effective. The scheme has been unanimously recommended by SAR’s board subject to no superior proposal emerging. The transaction is expected to create $1.5-2 billion is pre-tax synergies through the consolidation of the KCGM Super Pit, optimisation of processing and other savings over the next decade.

On the 25^th of November they companies provided an update to confirm all Northern Star financier consents and Material Saracen Facilities and Relevant Agreements consents had been obtained. A number of conditions remain to be satisfied including approval from Saracen shareholders and Court approval with an estimated completion date in February 2021.

For the financial year ending June 2021 revenue is forecast to rise +32.9% top A$1,427m and a further +10.6% increase in 2022 to A$1,578m. Earnings per share is expected to grow 47% in 2021 to A$0.33 and a further +19% in 2022 to A$0.39. Based on these figures the stock trades on forward P/E multiples of 14.9 and 12.5 respectively, roughly 35% premiums to the peer group averages of 11.1 and 9.4.

The average target price of analysts covering the stock is $6.37 with 30% of analysts rating the stock as a buy, compared to 10% as a sell and 60% as a hold.

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