Market Update & Important Indicators
U.S. stocks rose Wednesday, but pulled back from session highs, following positive U.S. economic data and as negotiations between Greece and its international creditors continued to move forward. The Dow Jones rose 0.4% to 18,076 and the S&P 500 gained 0.2% to 2,114.
European stock markets ended a volatile session mostly higher on Wednesday after European Central Bank President Mario Draghi vowed to keep quantitative easing running until September 2016. Germany's DAX 30 index posted one of the biggest gains among major country-specific indexes, rising 0.8% to close at 11,419.6. France's CAC 40 index climbed 0.6% to 5,034.2, while the U.K.'s FTSE 100 index picked up 0.3% to 6,950.5.
Australian shares slumped to their lowest daily close in four months on Wednesday, as upbeat local economic data failed to break a spell of weakness among banking stocks. The S&P/ASX 200 index shed 0.9% to 5583.6, its lowest closing point since January 30 and not far above its four-month intraday low of 5574.6. Caution abounded elsewhere in Asia. Stocks in Korea, Taiwan and Japan were all down. Hong Kong's market got a boost from the trading debut of Cheung Kong Property Holdings, up 5.9%. The Hang Seng Index finished up 0.7%, or 190.75, at 27657.5.
Metals on the LME were mixed with copper falling 0.5% to US$2.72/lb and zinc rising 0.5% to US$0.98/lb. Gold was down 0.7% to US$1,185/oz and Brent gained 1.2% to finish at US$63.88/bbl. The AUD/USD is trading at 0.777.
Argonaut thought for the day
Review of Argonaut’s best undeveloped projects
In December 2014, Argonaut released a report listing our picks for the best undeveloped projects owned by companies listed the ASX (Best Undeveloped Projects). Selection criteria was based upon ability to generate high margins, tolerable risk with expected near term development and the capability to remain profitable in commodity cycle lows. We took a relatively agnostic approach to the management and capital structure of the operating company.
Upon review the 11 projects that were selected, there is a high level of success. The average return for these stocks since publication on the 5th December is 48%. This compares favourably against indexes, including; ASX S&P 200 Index (5%), ASX S&P Resources 200 & Resources 300 (both ~3%) and the ASX Small Resources (22%). Gold Road (GOR) has been the standout performer, up 107% over the six month period.
Quality project advance and attract corporate attention
Of the 11 projects, three projects have been acquired or are under a takeover offer and all have significantly advanced development.
Panda Hill (CXX) – Released a positive PFS with US$470m NPV and a post-tax IRR of 56%
Gruyere (GOR) – Scoping Study released, Resource upgraded from 3.8Moz to 5.5Moz
Epanko (KNL) – Test work confirming high quality of graphite, binding off-take imminent
Deflector (MYG) – Company acquired by Doray Minerals
Keysbrook (MZI) – Construction underway, on budget and ahead of schedule
Natougou (OBS) – Company acquired by SEMAFO Inc.
Buck Creek (PNL) – Positive PSF released, with NPV of A$229m and an IRR of 32%
Ngulla (PEK) – JV funding through to development, significant processing advancements
Nova (SIR) – Company currently under a takeover bid from Independence Group
Balama (SYR) – Positive BFS release with a 71% IRR and US$1.1b NPV
Karouni (TRY) – Construction nearing completion, commissioning expected in July
Recent Contacts & Presentations
Gold Road (GOR), Troy Resources (TRY), Orbital (OEC), Site Group (SIT), Saracen (SAR), Kibaran (KNL), Sino Gas & Energy (SEH), Rewardle (RXH), Alexium (AJX), Ausdrill (ASL), Tox Free (TOX), OBJ Limited (OBJ), Dacian (DCN), Saracen (SAR), Fertoz (FTZ), Atrum (ATU), , Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), MZI Resources (MZI), High Peak Royalties (HPR)