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Early results from Saracen Minerals’ (SAR) underground exploration program at Red October (RO) returned highly encouraging results and point to tangible mine life extensions. The stock is catalyst rich with ongoing high impact drilling campaigns testing both RO and Karari, as well as a pipeline of regional prospects. SAR has a few outstanding features, including a cost makeover from ~$1,500/oz to <$1,000/oz in FY15 and one of the largest in-the-money hedgebooks (149koz @ A$1,647/oz). Whilst the stock has outperformed peers in recent times, the undertaking of a high impact drilling campaign at Karari and Red October is expected to deliver further upside. Argonaut has increased its valuation to $0.46 incorporating an additional year of production from RO and an expanded underground operation at Karari.
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SAR Price at posting:
43.0¢ Sentiment: None Disclosure: Unspecified
