Argonaut | The Natural Choice in Resources

US equities closed down 150 points, amid investor concerns over lower than expected earning’s results (Industrial Giant Caterpillar down 7.5%) and global concerns over China’s economic growth; Crude slid more than 5% in Tuesday’s session as Saudi Arabia pledged to meet any supply shortfalls and a risk averse sentiment spread throughout global markets. Saudi Energy Minister said OPEC and its allies are in “produce as much as you can mode” to meet demand and replace any looming shortages due to Iranian sanctions; Trump has deferred to Congress on US response to Kashoggi killing with Turkey rejecting the Saudi account of the killing; Copper and nickel declined (0.8% and 1.3%) amid persistent concerns about the outlook for the Chinese Economy, despite LME Copper Inventories falling to their lowest levels since April 2016.

Kidman Resources (KDR) released an integrated study for the Mt Holland mine and lithium concentrator and the Kwinana lithium hydroxide (LiOH) refinery (50:50 JV between KDR and SQM). The study outlined up to 47 years project life producing 45.3ktpa LiOH with upfront capex of US$601m and cash operating costs of US$5,409/t (per tonne LiOH). We place Mt Holland in the top three hard rock lithium projects globally given its scale, grade, geometry and low sovereign risk jurisdiction. Unfortunately, KDR has not had resolution to date for an exemption from claims relating to minimum expenditure obligations for tenements held by Kidman subsidiaries. The matter is currently with the Minister for Mines and Petroleum. Argonaut believes the Minister will ultimately grant the exemption which should result in a rerating of the stock. However, there is no definitive timeline on the Ministers pending decision. Argonaut downgrades KDR to a SPEC BUY from BUY pending an outcome on the minimum expenditure obligation claims.

Argonaut is pleased to announce the successful $12.5 million Initial Public Offering (“IPO”) on the ASX of Stealth Global Holdings Ltd (“Stealth” or “the Company”). Stealth is a fast-growing sales and distribution group supplying safety, industrial, workplace and healthcare consumable products and customised supply solutions to business customers across the resources, engineering, transport and general industrial sectors.