Latest Research

Evolution Mining (EVN) - Peak Performance And Value

Evolution Mining LogoEvolution Mining (EVN) delivered March Q production of 191koz (+2% vs Dec Q 186koz QoQ) in line with Argonaut’s estimates of 191koz. All-in sustaining costs (AISC) of A$768/oz were -2% lower QoQ (A$784/oz in Dec Q). Standout performance came from the Ernest Henry (EH) asset with 23koz at AISC of negative -$510/oz (including by-product credits). Group operating mine cashflow of $175m (Mar Q $205m) and net mine cashflow of $111.4m (Dec Q $134.2m) were lower than expectations as a result of delayed shipments from Mt Carlton and Cowal and will be realised in the June Q. Group ore reserves increased to 7.1Moz (net of depletion) representing ~9 years of mine life on current production rates. We now forecast production at the mid-point of the revised 790-805koz FY18 production guidance. We revise our target price upwards to $3.01ps ($2.66 prior) and maintain our HOLD recommendation after recent share price strength.

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Sino Gas & Energy (SEH) - Production Lifiting And ODP Imminent

SIno Gas & Energy LogoSino Gas and Energy (SEH) announced a strong increase in production which averaged 25MMscr/d for the March Q, up 16% Q-on-Q. Operating margins increased by 35% to US$4.8/Mscf driven by higher production and higher natural gas prices. SEH has now received Overall Development Plan (ODP) approval in-principle for Linxing (LX) and Sanjiaobei (SJB) with final finalisation for both expected in H1 2018. The only cloud looming over the ODP process is the ongoing negotiation with LX SOE partner CUCBM regarding profit and cost allocations under the Production Sharing Contract (PSC). We believe SEH should emerge from this process with an equivalent or better economic standing than at present.

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St Barbara Ltd (SBM) - Cash Is King

St Barbara Ltd LogoSt Barbara (SBM) announced March Q production of 86koz (-14% vs Dec Q) at an all-in sustaining cost (AISC) of $982/oz (+8% on Dec Q). Lower throughput at Gwalia was impacted by mine sequencing and was partly offset by high head-grades running at 15g/t (92% above reserve grades). Cash at bank increased by $50m to $262m after dividend payments of $16m and investments of $4m. Simberi FY18 guidance was updated to 125-132koz (from 115-125koz) to reflect improved operational performance, however costs have rose by 14% on lower grades and work stoppages. Full year group guidance now stands at 375-392koz (prior 365-385koz) at an AISC of $920-970/oz. We view SBM as a high-quality gold miner with significant free cash generation. We move to a HOLD recommendation (from SELL) following revisions to our model to push Gwalia mine life out to 10 years and increase our target price to $3.84 (prior $3.23ps).

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Regis Resources (RRL) - Splish Splash But Still Making Cash

Regis Resources LogoRegis Resources (RRL) released March quarterly production of 85koz (-7%, Q-o-Q) which was in line with Argonaut's expectations whereby wet conditions resulted in disruptions to mining at the satellite pits. Group costs increased to $905/oz (vs $855/oz +7% Q-o-Q) on lower milled grades and higher strip ratios. Operating cashflow was $71m (vs $84m, +30% Q-o-Q) with cash and bullion decreased to $168m (-2% Q-o-Q). FY18 YTD production of 269koz at AISC $873/oz remains in line with refined production guidance of 355-360koz. We move to a HOLD recommendation (prior BUY) following recent share price strength and following revisions to our model. We increase our target price to $4.69ps ($4.62 prior).

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Saracen Mineral Holdings (SAR) - Funded For Growth

Saracen Mineral HoldingsSaracen (SAR) reported March Q results with group gold production of 79.7koz at an all-in sustaining cost (AISC) of $1,181/oz versus Argonaut’s forecast of 78koz at $980/oz. The Company’s cash and bullion increased $16.2m Q-on-Q to $91.5m with both Carosue Dam and Thunderbox generating strong free cash flow. Looking forward, SAR is focussed on defining a 7-year production outlook growing to 350-400kozpa. Organic growth through exploration is the key driver for this target and we believe higher production rates will be largely driven by successful Reserve expansion and an uplift in the average milled head grade.

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