Argonaut | The Natural Choice in Resources

Argonaut is a full service advisory, stockbroking & research and investment house with offices in Perth and Hong Kong. Argonaut is technically driven & focused on natural resource companies & businesses that service the metals, mining, energy and agri-business sectors. Argonaut has an established track record of creating significant wealth for clients.

Morning Notes

The Nasdaq Composite Index breached its all-time closing high for the first time in 15 years on Thursday. The S&P and Dow were both up marginally, rising 0.2% and 0.1% respectively.

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Latest Research

On 23 April 2015 SEH announced a $80m capital raising at $0.16/ps comprising an unconditional $32.3m placement, a conditional A$47.7m placement (subject to shareholder approval) and a Share Purchase Plan. According to SEH the placement will fund the company towards Overall Development Plan (ODP) approval, exploration activity and provide working capital. In addition the capital raise will provide flexibility for debt repayment, strengthen the balance sheet and bolster SEH’s financial strength for commercial dealings and general corporate purposes.

The 202m shares issued under Tranche 1 has increased the amount of shares on issue to ~1.75b and we have subsequently adjusted our valuation down to A$0.35/ps. Assuming shareholder approval for the Tranche 2 placement, SEH will have 2.04b shares on issue. The additional 0.5b shares issued further dilutes our valuation from A$0.35/ps to A$0.31/ps. While we view this capital raising as significantly dilutive due to price and quantum we are still attracted to the underlying assets and technical execution of the project. We remain positive on SEH. BUY maintained.

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Latest News

Argonaut, as lead manager, has been successful in the heavily oversubscribed Placement of A$4.1 million (gross) for Kibaran Resources Limited (ASX: KNL) (“Kibaran”) via a Placement to Australian and international institutional and sophisticated investors of approximately 24.4 million new ordinary shares at an issue price of A$0.17 per share.

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