Latest Research

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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Evolution Mining (EVN) - A Standout Year

Evolution Mining logoEvolution Mining (EVN) delivered June Q production of 218koz (Mar Q 202koz +8%) slightly above Argonaut’s estimate 215koz. All-in sustaining costs (AISC) of A$825/oz were 2% lower qoq (A$840/oz in Mar Q) as a result of improved costs at Cowal, Edna May and Cracow. Standout performance came from the Ernest Henry (EH) asset with June Q production of 24koz (+7% qoq) at an all-in sustaining cost of negative -$432/oz (-$447/oz in March Q). EVN repaid a further $125m in debt ($40m in March Q), with no further debt obligations required until October 2017 and remaining net debt of $399m. June Q net mine cashflow of $137.1m (+24% vs March Q 110.7m) was higher largely as a result of the strong performance of Ernest Henry which represented ~35% of the group net cashflow generation for the Q. Argonaut maintains a BUY Recommendation with a A$2.49ps target price (prior $2.57).

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Northern Star Resources (NST) - A Strong Finish And More In The Post

Northern Start Resources LogoNorthern Star (NST) delivered an outstanding June Q, producing 154koz at an all-in sustaining cost (AISC) of $938/oz (+22% production, -5% on costs vs the Mar Q). Group production was boosted by the stellar performance at the Jundee operations of 85koz at AISC of $754/oz, 66% higher than the March Q. Underlying free cashflow from operations was $60.7m (vs $59.8m in March Q) ending with net cash and investments of $447m. Group production came in at 514.7koz @ AISC $1,013/oz reaching the top end of its 485- 515koz FY17 guidance and the lower end of costs. FY18 guidance forecasts 525-575koz @ AISC of $1,000-$1,050/oz (vs Argonaut 566koz). Looking ahead we await NST’s corporate update in early August which Argonaut believes will paint the picture of growth beyond 600-700kozpa in coming years. NST remains our key pick in the gold space and we reiterate our BUY recommendation and we upgrade our target price to $5.25 (prior $4.89).

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