Market Update & Important Indicators
U.S. stocks retreated Tuesday, pulling back after two sessions of gains, as oil prices slipped and the dollar strengthened. In late trading the Dow Jones Industrial Average fell 200 points, or 1.1%, to 17,776. The S&P 500 shed 18 points, or 0.9%, to 2068.
European equities shrugged off uncertainty over Greece's financial future on Monday, still spurred by accommodative central bank monetary policy, coupled with a revival in corporate appetite for mergers and acquisitions. The FTSE 100 closed down 1.7% at 6,773.
Asian stocks ended in mixed fashion Tuesday, as the positive mood from the prior-day's Shanghai-led rally induced both profit-taking and stoked further enthusiasm among investors. In Japan, the benchmark Nikkei Stock Average succumbed to late profit-taking pressure to end down 1.1% at 19,207.0. Shanghai closed down 1.0% at 3747.9, while Hong Kong's Hang Seng Index gained by 0.3% to 24941.8. S&P/ASX 200 rose 0.8% to 5891.5 points, recovering from a selloff Monday and ending the first quarter 8.8% higher.
Oil prices fell Tuesday as investors awaited the outcome of Iranian nuclear talks, which could pave the way for more Iranian crude to hit the already-oversupplied global market. Brent fell 1.2% to US$55.17/bb. Metals on the LME were down across the board with copper nickel and zinc falling 0.7%, 3.8% and 1.3% respectively. Gold was down marginally, falling 0.2% to US$1183/oz. Iron ore fines continued to plummet, falling 2.5% to US$51.35/t.
In This Issue
Cradle Resources (CXX) | SPEC BUY
Cradle Resources (CXX) released a positive PFS on the Panda Hill Niobium project in Tanzania (CXX pro-forma 50%, Tremont Investments concurrently earning-in 50%). Drilling through 2014 defined the high grade Angle Zone which significantly improves the economics of the project for the first 10 years. The PFS detailed 2Mtpa plant with 30 year’s mine life producing an average 6.8ktpa of ferroniobium (FeNb). The project benefits form high margins with total cash costs estimated at US$21.78/kg against a historically stable price range of US$35-45/kg. The applied price of US$44/kg returns LOM EBITDA of US$103mpa, however the high grade Angel Zone increases this to US$133mps for the first 10 years.
Buru Energy (BRU) | Initiation | BUY
Buru Energy (BRU) is an oil and gas company focused on exploring and developing the Canning Basin. BRU has drilled 12 wells to date and has the largest acreage position in the Basin with interests in permits covering 82,909 km2. The Company is in JV’s with partners Mitsubishi and Apache but maintains overall high equity operatorship. 2015 is a critical year for BRU as it progresses both the conventional oil plays in the Ungani Formation and the tight wet gas plays in the Laurel Formation. Looking forward, share price catalysts include 1) Ungani appraisal/development drilling over 2015, 2) Laurel Fracking program on the Asgard and Valhalla wells, 3) Drilling of the Olympic well and 4) Shooting of 50km of seismic in the Goldwyer Formation. Buy with 69c price target.
Sandfire Resources (SFR) | BUY
Sandfire Resources (SFR) announced after market that it’s reached an agreement with ANZ Banking Corporation to amend the repayment schedule for the DeGrussa project finance facility making just two payments of $5m in the March and June Qs with the remaining $120m to be paid in H2 CY15. The previous schedule had SFR repaying $45m in H1 and $85m in H2. SFR state the process of restructuring the existing facility “better aligns” with a new mine plan and “improves access to cash flows from DeGrussa”. Although we do not rule out the possibility of production issues or increased opex/capex having an influence on the timing of the refinancing, Argonaut believes SFR may seek to extend repayments beyond CY15 and eliminate balance sheet risk.
Recent Contacts & Presentations
Saracen (SAR), Beadell (BDR), Pacifico (PMY), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Helix Resources (HLX), Rift Valley Resources (RVY), West African Resources (WAF), Matrix (MCE), Austal (ASB), Ausdrill (ASL), TFS Corporation (TFC), Gage Roads (GRB), Austin Engineering (ANG), Buru Energy (BRU), OBJ Limited (OBJ), Strandline Resources (STA), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), MMA Offshore (MRM), Migme (MIG), Vmoto (VMT)