Morning Notes

05/10/2017 Argonaut Morning Note

Market Update & Important Indicators
Shares of internet retailers rose Wednesday, putting the S&P 500 on track to extend its recent winning streak. E-commerce firms like Netflix and have been among the market's best performers this year, helping to power U.S. stocks to fresh all-time highs despite concerns about their valuations and rapid rise. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each set at least 40 all-time highs this year. The Dow industrials inched up 0.1%. The S&P 500 rose 0.1% and the Nasdaq Composite swung between small gains and losses and was recently down less than 0.1%. U.S. economic data was mixed Wednesday. First, a report showed hiring at private U.S. employers grew less than expected last month, with hurricanes denting economic growth. Then, the Institute for Supply Management said its index measuring service-sector activity rose to its highest level since 2005. Investors will be closely monitoring Friday's monthly jobs report for another reading on the economy. The U.S. gold price traded higher overnight, again firming slightly to close at 1,274.60 US$/oz.

European markets closed mostly lower Wednesday, with Spanish stocks leading the way south after Catalan officials reiterated their pledge to declare independence in coming days. The Stoxx Europe 600 index fell 0.1% to end at 390.40, breaking a nine-day winning streak, the benchmark's longest since July 2015. The IBEX 35 index finished down 2.9% at 9,964.90, suffering its biggest daily drop in more than a year and ending at a level last seen in March. Catalonia's secessionist leader Carles Puigdemont told the BBC the region will declare its independence in a matter of days, a move that would defy the central government in Madrid that has declared Sunday's referendum illegal. Around 90% of voters supported the idea of breaking away from Spain, but less than half of Catalonia's population voted in the referendum.

Stocks climbed in Asia after upbeat car-sales data and rising airline stocks propelled U.S. benchmarks to new records. Hong Kong's Hang Seng Index rose 0.7% to its highest close since April 2015. China's central bank gave Hong Kong stocks a boost with its announcement Saturday that it would free up more long-term funds in January for banks to lend to small and private businesses. That is expected to help small businesses withstand Beijing's effort to lessen overall leverage in China's economy. Markets in China, South Korea and Taiwan markets were closed, crimping overall liquidity. Japan's Nikkei Stock Average rose 0.1% - ending at its highest since August 2015 - despite a rebound in the yen.

Australia was set to become Wednesday’s worst-performing equities market in Asia, with the benchmark index closing at an 8-month closing low, and slipping into negative territory for 2017. With all sectors in the red, the S&P/ASX 200 settled near the session low with a drop of 0.9% to 5652.1. The heavily-weighted banking sector was led lower by a 2.1% decline in ANZ. QBE Insurance also rebounded 2.8% after Tuesday's slump, on news its earnings would be hit by a jump in claims costs.

The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 0.02% to finish at $6,521/t. The other base metals finished mixed. Nickel prices dropped 0.1% to 10,522/t, while aluminium prices gained 1.4% to 2,144/t. Lead prices fell 1.3% to close at 2,552/t, with Zinc prices jumping 1.5% to 3,365/t. Tin prices traded 0.1% lower at 20,929/t.

In this issue
Paringa Resources (PNL) | Breaking ground and optimising | BUY
Market Cap $116m | Current Price $0.37 | Target Price $1.66

Argonaut recently attended a site visit to Paringa Resources’ Buck Creek thermal coal project in Kentucky, USA. Earthworks are well underway at the first mine, Poplar Grove, which is due to commence production from August 2018. Poplar Grove will ramp up to 2.8M tons pa with total production expected to reach >6.5M tons pa from 2022 with the addition of the Cypress mine. PNL is taking a low risk approach to development by employing locally experienced contractors, adopting well-practiced mining methods and by allocating 90% of development capex into fixed price contracts. Poplar Grove is fully funded via a $53m equity raising in April and commitment for a US$20m debt facility with Macquarie Bank. BUY recommendation maintained.

Recent Contacts & Presentations
Emmerson Resources Ltd (ERM), Gage Roads Brewing Ltd (GRB), Otto Energy Ltd (OEL), Whitebark Energy Ltd (WBE), MZI Resources Ltd (MZI), Gascoyne Resources ltd (GCY), NTM Gold Ltd (NTM), Novo Resources Ltd (NVO:TSX), Alice Queen Ltd (AQX), Melbana Energy Ltd (MAY), TOX Free Solutions Ltd (TOX), Artemis Resources Ltd (ARV), Apollo Consolidated Ltd (AOP), Vault Intelligence Ltd (VLT), Fleetwood Corp Ltd (FWD), DTI Group Ltd (DTI), Calima Energy Ltd (CE1), Austal Ltd (ASB), Indoor Skydive Australia (IDZ), OZ Minerals Ltd (OZL), NorWest Energy Ltd (NEW), Berkut Minerals Ltd (BMT), Draig Resources Ltd (DRG), Minotaur Exploration Ltd (MEP), Ausdrill Ltd (ASL), Neometals Ltd (NMT), PNX Metals Ltd (PNX), Northern Minerals Ltd (NTU), New Century Zinc Ltd (NCZ)

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