Latest Research

Agrimin Ltd (AMN) - Company Update

Agrimin Limited LogoAMN has released a PFS for the Lake Mackay project which is in our opinion economically robust. By applying a 50/50 debt equity funding package needed to develop the project we have valued the project at $1.29/sh. and to account for the risk of securing funding and executing the project we have discounted our valuation by 25% and derived a risked price target of $0.97. Based on our price target of $0.97 p/sh. and thanks to recent share price gains over the last 6 months we change our recommendation to a Hold (prev. Spec Buy.)

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Sino Gas and Energy (SEH) - Takeover Offer Received From Lone Star

Sino Gas and Energy LogoSEH has received an all-cash takeover offer from Lone Star. The bid values the business at A$530m or A$0.25 which we believe is on the low side considering the progress SEH has made in unlocking value in its gas projects. This bid and acceptance by the SEH Board are likely to signal to the market the company is in play, and we expect other bids to emerge which may be more representative of SEH un-risked value. SEH’s JV partner’s (CNEML) parent has defaulted on a bond payment which potentially rules out a natural acquirer for SEH and may explain the smaller discount offered by Lone Star. Argonaut maintains a BUY recommendation, with a risked target price $0.24/share target price (under review) and an un-risked valuation of A$0.48

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Explaurum Ltd (EXU) - Tampia Feasibility

Explaurum Ltd LogoEXU has released a positive result for their Tampia Gold Project Feasibility Study (FS) outlining a low cost and high margin operation with All-in sustaining cost (AISC) of $998/oz for the life of mine (LOM) and AISC of $896/oz over the first two years. The capital cost of $119m (+/- 15%) includes a contingency of $10.8m. EXU envisages a 1.5Mtpa processing plant (hard rock capacity) with an initial mine life of 6 years and 534koz mined. Production will peak at 104koz in the first two years, with LOM average production of 92kozpa. The project will generate average EBITDA of $62mpa over the LOM with a pre-tax NPV8% of $125m, an IRR of 47% and a payback of 1.5 years. EXU will now move to complete the Bankable Feasibility Study by October 2018 with board approvals for finance and development options expected by December 2018. Maintain Speculative Buy and TP $0.19ps (prior $0.21ps).

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Independence Group (IGO) - Jaguar Divestment

Independence Group LogoIndependence Group (IGO) has entered into an agreement with CopperChem Limited, a wholly owned subsidiary of Washington H. Soul Pattinson, to sell its Jaguar asset for $73.2m. IGO will receive $25m upfront and a further $48.2m in deferred cash payments. The Company stated Jaguar no longer fits with its focus on high-quality, long life assets. Argonaut valued Jaguar at $147m, so we regard this transaction as non-accretive. Going forward, the Company has a strategy to focus on battery minerals to take advantage of what they term “a battery super-cycle”. Argonaut upgrades IGO to HOLD with a revised target price of $4.15.

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Fortescue Metals (FMG) - Eliwana Is A Go

Fortescue Metals LogoFortescue Metals (FMG) has green-lit the Eliwana Project in Western Australia following Board approval this week. The project will include an additional 143km rail spur, a new 30Mtpa dry ore processing facility and associated infrastructure. Estimated capital costs for the project are US$1.275bn with production due to commence in December 2020. FMG will deploy capital in stages with the bulk of spending expected in FY20. Management had previously suggested construction could begin as early as July-August 2018. The news is positive and helps FMG sustain a long term run rate of 170Mtpa, however questions still remain for Eliwana Reserves (due August 2018), operating costs as well as the planned product integration. Maintain HOLD.

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