Saracen offers small glimmer amid gold sell-off

Saracen Mineral Holdings (SAR) is one of the few gold stocks trading higher this afternoon.

Saracen Mineral Holdings (SAR) is bucking the market trend, as it is one of the few gold stocks that’s trading higher this afternoon.

The gold miner was up 4%, or 0.7 cents, at 19.2 cents at 1.24pm AEST after releasing a pleasing production update for the December quarter, which showed Saracen exceeded production guidance with 31,069 ounces of gold produced.

Management was aiming to deliver 28,000 to 30,000 ounces for the quarter, and the better-than-expected performance means it is 11% ahead of the upper end of its increased guidance for the full year.

What is perhaps more significant is the expected drop in Saracen’s all-in sustaining cash cost to $A950 an ounce in 2014-15, compared with around $A1,500 per ounce now.

The fall in costs will help Saracen transition out of its hedging contracts, which currently allows the miner to sell gold at around $A1,400 an ounce.

Most gold miners are trading in the red after the spot gold price came under pressure overnight, with a stronger jobs report in the United States bolstering the belief that the US Federal Reserve will continue to cut back on its stimulus program.

While analysts polled on Bloomberg are divided between a “buy” and “hold” for Saracen in the face of the uncertain outlook for the precious metal, the average price target of 26 cents a share is 35.4% above the current share price.

Saracen is part of the Uncapped 100 and the stock has shed close to 49% of its value over the past 12-months.

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