08 September 2015 Materials Saracen Mineral Holdings Limited. Table 1: Financial summary

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1 Company update 8 September 215 SARACEN MINERAL HOLDINGS LIMITED (SAR) Our preferred gold exposure We upgrade to a BUY rating (from Hold) on Saracen Minerals (SAR). SAR is our preferred small-to-mid cap gold exposure, with 1% of its revenues coming from AUD denominated gold production in WA. SAR has net cash of ~$45m this puts the company in a strong position to further grow its business via the Thunderbox gold project. We forecast FY16 production of AISC of $A$1,49/oz, and with the benefit of significant existing ore stockpiles, we forecast FCF of $66m over FY16. With the recent pullback in the share price, we return to a BUY. Our target price of $.47ps provides a potential 12 mth TSR of 16%. Key points Thunderbox project puts SAR on the path towards 3kozpa: We estimate the Thunderbox project will add ~A$1,3/oz AISC. On our modelling SAR will be able to comfortably fund this project (capex ~A$65m) from a combination of its net cash and bullion of ~$45m, plus the benefit of ~$66m of FCF over FY16 (pre any growth capex). SAR s strategy remains expanding gold production, within two years, to ~3kozpa at an AISC of <A$1,75/oz, funded from internal cashflows. SAR is a beneficiary of robust AUD gold price: The AUD gold price has been buoyant of recent times, driven primarily by the weakening in the AUDUSD. With a spot exchange rate of ~.695, SAR is well placed to benefit from the relatively weak currency (and so the higher AUD gold price). At the spot gold price of ~A$162/oz, SAR generates around A$46/oz (after corp costs and exploration). Valuation: we value SAR at $.47ps based on a DCF using a WACC of 1%. A spot scenario generates a valuation of $.56ps. A 1% higher gold price than we forecast produces a DCF of $.63ps. Risks and catalysts Key risks around SAR are: 1) production costs above our estimates, 2) sustained weakness in the Au price or strong AUD. Catalysts: 1) updated reserves and resource statement Oct-15, 2) ongoing drill results especially at the Karari underground, 3) results of Thunderbox underground DFS, due by end of CY15, 4) an improved gold price or weaker AUD. 12-mth target price (AUD) $.47 Share 8-Sep-15 (AUD) $.41 Forecast 12-mth capital return 16.% Forecast 12-mth dividend yield.% 12-mth total shareholder return 16.% Market cap $321m Enterprise value $284m Shares on issue 793m Sold short 3.6 ASX 3 weight.% Median turnover/day Phillip Chippindale, CFA phillip.chippindale@wilsonhtm.com.au Tel $ mth share price performance SAR XSR Rebased $.8m.1 Aug-14 Dec-14 Apr-15 Aug-15 1-mth 6-mth 12-mth Abs return (%) Rel return (%) FY14A FY15A FY16F FY17F FY18F Revenue ($m) EBITDA margin (%) NPAT norm ($m) Consensus NPAT ($m) EPS norm (cps) EPS growth (%) P/E norm (x) EV/EBITDA (x) CFM (x) DPS (cps)..... Franking (%) Source: Company data, WHTM estimates, S&P Capital IQ KEY CHANGES 28-Aug After Var % Revenue: FY16F % ($m) FY17F % FY18F % EBITDA: FY16F % ($m) FY17F % FY18F % EPS: FY16F.8.8.% norm FY17F % (cps) FY18F % Price target: % Rating: HOLD BUY Wilson HTM Equities Research Issued by Wilson HTM Ltd ABN Australian Financial Services Licence No , a participant of ASX Group and should be read in conjunction with the disclosures and disclaimer in this report. Important disclosures regarding companies that are subject of this report and an explanation of recommendations can be found at the end of this document.

2 Table 1: Financial summary Capital P rofile June year end 214A 215A 216F 217F 218F Number of shares (m) 793 NPAT Reported (A$m) Market capitalisation (A$m) 325 NPAT Normalised (A$m) Enterprise value (A$m) 33 EPS (A ) Enterprise value (US$m) 255 CFPS (A ) DPS (A )..... R eso urces T o nnes Grade M etal P/E (x) (M t) (g/t / %) (koz / kt) P/CF (x) Gold resources EV/EBITDA (x) Gold reserves EPS Growth -182% 86% -44% 47% 1% Yield (%).%.%.%.%.% EV/oz Gold resource (A$/oz) 49 P roduction 214A 215A 216F 217F 218F EV/oz Gold reserve (A$/oz) 2 Carosue Dam (koz) Thunderbox (koz) Total gold production (koz) C o sts 214A 215A 216F 217F 218F SA R valuatio n WH T M e Spo t Carosue Dam C1 cash costs (A$/oz) Description A$ m A$ ps A$ ps Carosue Dam AISC cash costs (A$/oz) Carosue Dam Thunderbox C1 cash costs (A$/oz) Thunderbox Thunderbox AISC cash costs (A$/oz) Total Operations Avg group AISC (A$/oz) Net cash / (debt) Operational EBITDA by asset 214A 215A 216F 217F 218F Hedge.. Carosue Dam Corporate overheads (incl at asset level) Thunderbox Exploration A ssumptio ns 214A 215A 216F 217F 218F Total Valuation Gold (US$/oz) Target price AUD/USD P/NPV Gold (A$/oz) P rofit & Loss (A$ m) 214A 215A 216F 217F 218F Sales revenue Operational NP V split Valuation inputs Other revenue Rf rate 5.3% Total revenue MRP 6.% Operating costs Equity beta 1.1 EBITDA Ke 11.9% Depreciation Kd 8.% EBIT Gearing 3% Net interest benefit / (expense) Tax rate 3% Pre-tax profit WACC 1% Tax benefit / (expense) DCF (A$).47 Profit after tax Prem/disc % M inorities Target (A$).47 NPAT (underlying) Significant items NPAT (reported) P rofitability Analysis (%) 214A 215A 216F 217F 218F SAR Sensitivity NP V(A$ ps) 216F 217F EBIT margin 5% 7% 3% 11% 14% NPV $ps NPAT $m NPAT $m EBITDA margin 2% 26% 21% 23% 22% NPV / NPAT Effective tax rate -24% -31% -3% -3% -3% Au -1% decrease ROA - EBIT / (total assets - cash) 3% 6% 3% 22% 27% Au -1% decrease -35% -18% -77% ROE - NPAT / equity 3% 5% 3% 17% 16% AUDUSD +1% increase C ashflo w 214A 215A 216F 217F 218F AUDUSD +1% increase -32% -163% -7% EBITDA Operating cashflow Sust capex + exploration Gold production and costs Growth capex koz A$/oz Free cashflow (pre growth capex) Free cashflow (post growth capex) Thunderbox 45% #REF! % Carosue Dam 55% 214A 215A 216F 217F 218F Total gold production (koz) AISC avg group (A$/oz) - RHS Gold (A$/oz) - RHS Investing cashflow Financing cashflow Net Change in cash Balance Sheet Analysis 214A 215A 216F 217F 218F Debt Equity Assets Cash Net debt Gearing - net debt/equity -9% -16% -1% -39% -56% Gearing - net debt/ (net debt + equity) -1% -19% -11% -63% -126% Net debt / EBITDA EBIT / net interest EBITDA / net interest Free cashflow yield 13% 18% 2% 25% 14% Wilson HTM Equities Research 2

3 Chart 1: AUD and USD gold price over the last 12 mths $/oz Despite a slight pullback in the USD gold price, the AUD gold price has remained buoyant Sep-14 4-Nov-14 4-Jan-15 4-Mar-15 4-May-15 4-Jul-15 4-Sep-15 A$ gold price US$ gold price Source: Bloomberg, Wilson HTM Chart 2: Saracen Minerals - group production and cost profile 3 Koz A$/oz 2, 25 1,75 2 1,5 15 1,25 1 1, A 214A 215F 216F 217F 218F 219F 22F Carosue Dam Production (koz) Thunderbox Production (koz) Avg group AISC (A$oz) - RHS gold price (A$/oz) - RHS 5 Chart 3: Carosue Dam production and cost profile Koz A 215F 216F 217F 218F 219F 22F Carosue Dam Production (koz) C1 cash costs (A$/oz) - RHS gold price (A$/oz) - RHS AISC (A$/oz) - RHS A$/oz Wilson HTM Equities Research 3

4 Chart 4: Thunderbox production and cost profile Koz F 216F 217F 218F 219F 22F 221F Thunderbox Production (koz) C1 cash costs (A$/oz) - RHS gold price (A$/oz) - RHS AISC (A$/oz) - RHS A$/oz Chart 5: SAR operational NPV breakdown by asset Thunderbo x 45% Carosue Dam 55% Figure 2: SAR valuation breakdown SA R valuatio n WH T M e Spo t D escriptio n A $ m A $ ps A $ ps Carosue Dam Thunderbox T o tal Operatio ns Net cash / (debt) Hedge.. Corporate overheads (incl at asset level) Exploration T o tal Valuatio n T arget price P/NPV Wilson HTM Equities Research 4

5 PRICE TARGET Valuation Price Target Carosue Dam Thunderbox Total Operations Net cash / (debt) Hedge.27. Corporate overheads (incl at asset Exploration level) Total Valuation KEY ASSUMPTIONS AUD/USD Gold (US$/oz) 1,65 1,296 1,224 1,231 1,249 1,233 Silver (US$/oz) Nickel (US$/lb) Copper (US$/lb) Zinc (US$/lb) Lead (US$/lb) Production Carosue Dam Thunderbox AISC costs Carosue Dam 1, , , ,49.2 1,93.5 1,274.8 Thunderbox.... 1,475. 1,116.1 INTERIMS ($m) Half-year (AUD) Dec 14 Jun 15 Dec 15 Jun 16 1HA 2HA 1HE 2HE Sales revenue EBITDA EBIT Net profit Norm EPS EBIT/sales (%) Dividend (c).... Franking (%).... FINANCIAL STABILITY FY15A FY16F FY17F Net debt Net debt/equity (%) < < < Net debt/ev (%) < < < Current ratio (x) Interest cover (x) < < < Adj cash int cover (x) < < < Debt/cash flow (x).2.. Net debt (cash)/share ($) < < < NTA/share ($) Book value/share ($) Payout ratio (%) Adj payout ratio (%) EPS RECONCILIATION ($m) FY15A FY16F Rep Norm Rep Norm Sales revenue EBIT Net profit Notional earn.... Pref/conv div.... Profit for EPS Diluted shrs (m) Diluted EPS (c) RETURNS FY15A FY16F FY17F FY18F ROE (%) ROIC (%) Incremental ROE Incremental ROIC PROFIT AND LOSS ($m) Sales revenue EBITDA Depn & amort EBIT Net interest expense Tax Minorities/pref divs Equity accounted NPAT Net profit (pre-sig items) Abns/exts/signif Reported net profit CASH FLOW ($m) EBITDA Interest & tax Working cap/other Operating cash flow Maintenance capex Free cash flow Dividends paid Development capex Invest/disposals Other inv flows Cash flow pre-financing Funded by equity Funded by debt Funded by cash BALANCE SHEET SUMMARY ($m) Cash Current receivables Current inventories Net PPE Investments Intangibles/capitalised Other Total assets Current payables Total debt Other liabilities Total liabilities Minorities/convertibles Shareholder equity Total funds employed Wilson HTM Equities Research 5

6 (SAR) BUSINESS DESCRIPTION Saracen minerals is a Western Australian based gold miner listed on the ASX. The main asset is the Carouse Dam gold mine, comprising: 1) the Whirling Dervish ore stockpiles, 2) the Red October gold mine (producing ~6kozpa), and 3) additional underground sources. In addition, Saracen owns 1% of the Thunderbox gold project, which has the potential to produce 13-14kozpa over a +5yr mine life. INVESTMENT THESIS We believe Saracen Minerals offers leverage as a pure-gold exposure, with significant production growth ahead generating significant free cashflows. We expect a number of near term positive announcements, notably around the DFS into the Thunderbox gold project as well as exploration results for various ore bodies as well as possible reserve expansion. REVENUE DRIVERS Production growth Gold price AUD:USD BALANCE SHEET Cash: $44.9m (as at 3-Jun-15, incl bullion) Debt: $m (as at 3-Jun-15) Net cash: $44.9m KEY ASSETS Carosue Dam mine complex: Comprising the Whirling Dervish ore stockpiles (mine recently shut down), Red October underground mine (currently operating) and a number of potential new underground ore sources (Deep South, Karari, Whirling Dervish UG). Current production is ~15-16kozpa. Thunderbox gold project: A soon to be developed new dual-open pit mine which could produce 13-14kozpa over 5 years. RESERVES & RESOURCES Carosue Dam: Resources of 1.57g/t for 4.7Moz. Reserves of 1.65g/t for.78moz. Thunderbox: Resources of 1.6g/t for 2.1Moz. Reserves of 1.8g/t for.73moz. KEY ISSUES/CATALYSTS Thunderbox DFS: Mar-15 qtr Drill results from Karari underground Apr-15. Reserve expansion at Red October Mid-CY15. Maiden UG ore reserve of Karari 2H CY15. RISK TO VIEW Gold price lower than we anticipate Capex for Thunderbox higher than anticipated Higher operating costs than expected Geological / resource risk BOARD Geoffrey Clifford Non-executive Chairman Raleigh Finlayson Managing Director Barrie Parker - Non-executive Director Martin Reed - Non-executive Director Samantha Tough - Non-executive Director MANAGEMENT Raleigh Finlayson Managing Director & CEO Gerry Kaczmarek Chief Financial Officer, Company secretary Craig Bradshaw Chief Operating Officer Daniel Howe General Manager Geology & Exploration Lee Stephens GM Carosue Dam Operations MISCELLANEOUS AND OTHER N.a. CONTACT DETAILS Saracen Minerals Level 4, 89 St Georges Terrace Perth, WA 6 Ph: Wilson HTM Equities Research 6

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