Market Update & Important Indicators
U.S. stocks' gains faded, as investors focused on coming U.S. employment data. Worries about the health of the global economy have led some analysts to reconsider their forecasts on when the Fed will raise interest rates from record-low levels. U.S. economic reports this week culminate with Friday's employment report for August, which is expected to show an addition of 220,000 jobs, according to economists surveyed by The Wall Street Journal. The unemployment rate is forecast to tick down to 5.2% from 5.3%. The Dow and the S&P both rose marginally, by 0.1% to 16,375 and 1,951 respectively.
Australian shares Thursday gave up early gains to continue the week's slump following mixed economic data and a dive in retailer Myer Holdings on the back of a discounted share offer. Despite rising as much as 1.4% in the early hours of trading, an echo of a strong overnight finish by U.S. stocks, the ASX S&P finished down 1.4% at 5027.8. That brings the loss for the week so far to 4.5%.
European stocks extended gains sharply after European Central Bank President Mario Draghi left the door open to more stimulus and said ECB economists had lowered their economic growth and inflation forecasts. He made the comments in a news conference after the central bank kept its interest rates unchanged at record lows. The Euro Stoxx 50 rose 2.2%.
Chinese markets were shut overnight, while Japan's Nikkei ended the day 0.5% higher at 18,366.2, helped by a weaker yen during most of the day.
Metals on the LME were mostly up, with copper rising 2.5% to US$2.39/lb and nickel gaining 1.4% to US$4.53/lb. Gold was down 0.8% to US$1125/oz and Brent was up 0.4% to US$56.50/bbl. The AUD/USD is trading at 0.701.
In This Issue
Regis (RRL) | BUY
Argonaut’s valuation on Regis (RRL) increases to A$1.70 (was A$1.45) incorporating the Gloster and Baneygo deposits into our model. These increases modelled mine lives at Moolart Well to 4.5 years (previously 3.0) and Garden Well to 8.0 years (was 7.0 years). With a reinvigorated exploration effort, a pipeline of exploration targets and recently consolidated tenement packages, Argonaut considers further extensions highly likely. RRL generated one of the highest normalised FCF / oz margins during FY15. The stock offers size, liquidity, strong cash flow, dividend and arguably better production visibility than many peers with its open pit operations and a sizable Reserve base. Declining strip ratios at Garden Well and Rosemont should ensure RRL’s industry leading margins longer term. The recent announcements regarding Reserve update, FY16 guidance and exploration update were well received by the market. Although this resulted in significant share price appreciation, a solid September Q production would further enhance investor confidence and could translate into further upside. BUY maintained.
Recent Contacts & Presentations
Regis (RRL), Medusa (MML), Resolute (RSG), Rift Valley (RVY), Troy (TRY), Tox Free Solutions (TOX), GR Engineering (GNG), Austal (ASB), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), UIL Energy (UIL), Tlou Energy (TOU), FAR Limited (FAR), Cooper Energy (COE), Central Petroleum (CTP), Senex Energy (SXY)