Latest Research

Resolute Mining (RSG) - A Transitional Year Ahead

Resolute Mining LogoResolute Mining (RSG) delivered an in-line June Q, producing 71koz (-18% Q-o-Q) at an all-in sustaining cost (AISC) of A$1,502/oz (-45% Q-o-Q). The higher cost June Q was driven largely by Syama sulphide production coming largely from stockpiles at lower grades and recoveries than the March Q and lower milling of open pit sulphide ores from satellite deposits. Syama Q4 gold production declined by 32% to 47koz at an AISC of $1,558/oz. At Ravenswood, production improved to 24koz (+22% vs Q3) and costs fell to A$1,300/oz (-20% vs Q3) after higher proportions of Mt Wright saw head grades lift by 7% vs Q3. FY17 gold production finished the year with 330koz (vs Argonaut 309koz) at an AISC of A$1,130/oz (vs guidance of $1150/oz and Argonaut forecasts of A$1,028/oz). Underground ores continue to ramp up as mining pushes ahead with the Syama sub level cave development now feeding development ore into the production profile. After incorporating FY18 guidance into our model we revise our target price to $1.40ps (prior $1.53) and we maintain our BUY recommendation.

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Western Areas (WSA) - Magnificent Seven

Western Areas LogoWestern Areas (WSA) continued its impressive streak of stable production and low costs with June Q production of 6.0kt Ni in concentrate at C1 costs of $2.42/lb (before payability), broadly in line with Argonaut’s forecast of 6.1kt Ni at $2.45/lb. WSA finished FY17 with 26.0kt Ni at $2.38/lb, at the upper end of production guidance (25-26kt) and at the lower end of cost guidance ($2.35-2.50/lb). The Company strengthened its balance sheet to $140.3m cash (no debt), following the sale of its remaining interest in Bluejay mining Plc for $26.8m. BUY recommendation maintained with a $2.70/sh target price.

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OZ Minerals (OZL) - Production Strong, But A Wall Of Worry

OZ Minerals LogoOZ Minerals (OZL) released June Q production of 28.1kt copper and 32.1koz gold at an all-in sustaining cost (AISC) of US$1.15/lb (vs 25.1kt Cu, +12% and 26.1koz Au, +23% at US$1.35/lb for the March Q). Production rebounded after a rain affected Q1 CY17 and is on track to meet CY17 guidance of 105-115kt copper and 115-125koz gold. Of concern was the mention of a potential pit stability risk in the south wall of the Malu open pit. In 2012/2013, a failure in the upper south wall disrupted production and severely impacted the profitability of the mine. OZL retains a strong balance sheet with a $31m increase in cash QoQ (no debt) after $22m for Carrapateena development, a $20m addition to ore inventory and a $69m tax payment. BUY maintained with a $8.20 price target.

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Independence Group (IGO) - Honey I shrunk The Resource

Independence Group LogoIndependence Group (IGO) released several items including; i) a resource downgrade to Nova, ii) Jaguar value enhancement options and iii) the June Q production results. Most notable was a 15% reduction to the Nova/Bollinger resource following an intensive grade control drilling program. On a more positive note, IGO outlined a series of options to extend the mine life of the Jaguar project and improve metals recoveries. The June Q contained a mixed bag of results with an 11% QoQ increase of gold production at Tropicana, higher QoQ production at Jaguar, but a miss of FY17 guidance and steady production at Long. Unaudited Revenue, EBITDA and NPAT for FY17 were $421m, $151m and $17m respectively. Downgrade to HOLD with a $3.30 target price (from BUY at $3.80).

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Regis Resources (RRL) - Production Goes Into Orbit Mining Satellites

Regis Resources LogoRegis Resources (RRL) released stand-out quarterly production of 90,428oz (+14%, Q-o-Q) which was above Argonaut’s expectations thanks to a strong uptick in milled ore and higher head grades due to the inclusion of higher grade Gloster and Erlistoun ores. Group costs decreased to A$870/oz (vs A$1,024oz -15% Q-o-Q) as production rebounded post-rain related delays in the March Q and strip ratio’s decreased. RRL generated operating cashflow of $74.2m (vs $57.8m, +30% Q-o-Q) with cash and bullion increasing $151.7m (+32% Q-o-Q). RRL finished the year with record annual production of 324koz @ AISC of $945/oz, at the upper end of the 300-330koz @ $980-$1,050/oz guidance. Maintain BUY, TP 4.10 (prior $3.81).

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