Argonaut | The Natural Choice in Resources

Argonaut is a full service advisory, stockbroking & research and investment house with offices in Perth and Hong Kong. Argonaut is technically driven & focused on natural resource companies & businesses that service the metals, mining, energy and agri-business sectors. Argonaut has an established track record of creating significant wealth for clients.

Morning Notes

The Dow Jones Industrial Average is poised to close at a new high for the first time since Jan. 26 as investors' convictions in a booming U.S. economy helped them look past the latest trade sparring between the U.S. and China. Nearly all 30 stocks in the Dow industrials rose intraday, from the tech giants like Apple and Microsoft that have helped power the stock market to new highs to trade-sensitive stocks like Boeing and Caterpillar. The broad gains also pushed up the S&P 500, which is on track to top its Aug. 29 record, while the Nasdaq Composite moved within 1.2% of its high set the same day. The major indexes are rising alongside a recent jump in bond yields, a sign the market is shrugging off worries the Federal Reserve's pace of economic tightening could roil stocks. A strengthening U.S. economy has boosted sentiment, and several investors said the torrid pace of growth appears likely to outlive the trade tensions that have rocked stocks this year. The Dow industrials climbed 251 points, or 1%, to 26657. The S&P 500 added 0.8%, and the Nasdaq Composite rose 0.9%. The US gold price was up 0.3% to 1206.90 US$/oz.

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Latest Research

Stanmore’s FY18 underlying EBITDA rose more than 70% yoy to A$45.5m, vs Argonaut’s forecast of AS$48m, driven by 14% yoy increase in underlying margin. The Company announced a final dividend of 2c/sh, which we regard as a sign of balance sheet strength ($20m cash and no debt) and confidence to fund growth projects from expanding free cashflow. SMR’s FY19 ROM production is expected to increase >50% with the commissioning of the Isaac Plains East mine (IPE). This mine will have lower strip ratios, higher yields and a higher ratio of coking to thermal coal, resulting in lower FOB costs (A$100/t) and higher realised prices. SMR has growth options including the recently acquired Wotonga South (Isaac Downs) project immediately south of Isaac Plains and the Isaac Plains Underground (IPUG). A BFS on the underground is due for completion in the second half of CY18. The stock is currently trading at a very attractive EV/EBITDA of 2.1x, based on FY19 earnings. We reiterate our BUY recommendation on Stanmore and upgrade our target price to A$1.40 (prior A$1.10).

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Latest News

Argonaut Congratulates Dacian Gold on a Highly Successful Capital Raising
Argonaut acted as Joint Lead Manager to successfully raise A$40 million for Dacian Gold Limited (ASX:DCN) (“Dacian” or “the Company”). The Company raised funds from Australian and international institutional and professional investors by way of a placement at an issue price of A$2.70 per share. The placement was heavily oversubscribed with significant demand generated from new major domestic and international institutional investors.

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