I believe SAR has a fair value of $2 and it appears most brokers do believe that even though there are some brokers have a lower target price.
This is because they are basing it on a 300K oz per annum production as per the company's forecast.
What we do know is that SAR has beaten the expectations before and there is more of a likelihood that production forecasts will continue to increase in the near term while continuing to make sure the AISC maintains or lowers its cost base.
To further support the price, the POG AUD has steadily been going up and last night, I saw it as high as $1696, which was at an all time high for the last 52 weeks.
Australian producers such as SAR makes profits in AUD, but unfortunately sometimes trades at the whim of international investors. To make this point, NST has seen its share price continue higher based on the AUD POG, to a point where one post pointed to a $2000 AU Spot price.
I don't think it'll hit AUD $2000 spot price but maybe A$1800 spot price because of favorable exchange rates due to Australian economy being in a poorer position compared to US. This is even better as the gross margin shoots up to $800/oz instead of SAR now sitting around $600/oz gross profit.
There are been a number of risks to the market but it looks like the US market is at a turning point in the sense that debt is now being called back by the Feds.
Further more, Chinese loves physical gold, while westerners loves their paper gold. I can see China (and Russia, India and a few other Asian countries) hoarding Gold in order to topple USD as the reserve currency. Foundation are already being put in place such as Gold back Yuan for Oil exchange and they always keep a secret about how much gold they have until the very last minute, which surprised many when China disclosed about 22,000t worth. (way higher than any estimates)
Also China's spot price of gold is higher than the gold futures (and comex spot price).. which says something when one pays slightly above market price
Looking forward to $2 soon!
SAR Price at posting:
$1.45 Sentiment: Buy Disclosure: Held
