Market Update & Important Indicators
U.S. stocks drifted lower Monday after Greeks resoundingly rejected creditors' conditions for further financial aid. More than 61% of Greek citizens voted "no" in Sunday's referendum on the terms for a bailout that included pension cuts, tax increases and other measures. The "no" vote appeared to increase the likelihood that Greece may eventually exit the eurozone. Meanwhile, worries about China's stock markets contributed to the price of oil falling to a three-month low. Energy companies were the worst performing group in the S&P 500, which lost 8 points, or 0.4%, to 2,069. The Dow Jones Index dropped 47 points, or 0.3%, to 17,684.Stocks and bonds in Europe fell on Monday after Greece's voters set the country on a collision course with the rest of the eurozone, but it wasn't the heavy selloff predicted by many investors. The FTSE, DAX and CAC declined 0.8%, 1.5% and 2.0% respectively.
Stocks in Hong Kong tumbled, while China's stabilized, as Beijing took unprecedented steps to stem a three-week selloff. Hong Kong's Hang Seng Index shed 3.2% Monday, its worst one-day performance since 2012. The index is now down 11.3% since its April high, entering correction territory. On the mainland Chinese officials have turned to an array of tools to prop up the market in recent days: from encouraging stock buying with borrowed money to rallying state-affiliated firms to invest. The Securities Association said that 21 brokerages pledged to try to increase investments in the stock market through a 120 billion yuan market-stabilization fund as long as the Shanghai Composite Index stays below 4,500. The Shanghai Composite finished the day 2.4% higher at 3,776.
Base metals on the LME ended the day largely lower, with copper down 2.9% and nickel off 2.5%. Oil was the biggest loser, with Brent dropping 6.3% to $56.54/bbl and WTI falling 7.7% to $52.53/bbl. Gold was only a small winner, climbing 0.4% to $1,170/oz.
In This Issue
Metals & Mining | June Q Preview
Argonaut provides a preview for the June Q 2015. Weak metal prices were once again a feature with the ongoing Greek debt concerns weighing on the LME and Chinese stimulus measures failing to induce higher commodity prices. Gold, nickel, iron ore and uranium all fell Q-on-Q and, although the average quarterly prices for copper and zinc were up, both are currently trading at yearly lows. Increased M&A was a feature with numerous project and corporate level acquisitions initiated. During the Q Argonaut visited Gold Road’s (GOR) Gruyere project and Hanking Mining’s SXO operations.
Saracen (SAR) | BUY
Saracen Mineral (SAR) released additional high grade, extensional results from Karari. Based on Argonaut’s estimates, the known lodes average ~15-20kt ore per vertical metre at an average grade of ~3.3-3.8g/t. These results, combined with improved geological understanding, will likely translate to the Company achieving or exceeding its Karari guidance of ~4 years of Reserves @60-70koz pa. The operation is likely to become an integral part of SAR’s upcoming 5-year plan. The stock is well positioned on the operational front with a Record Q expected and ongoing cash build. Conducive geology and the Company’s A$20m drilling campaign will ensure the continued delivery of high grade hits. BUY recommendation maintained.
Recent Contacts & Presentations
Tox Free Solutions (TOX), GR Engineering (GNG), Austal (ASB), Northern Star (NST), Sandfire (SFR), Western Areas (WSA), Panoramic Resources (PAN), Regis (RRL), Kingsrose (KRM), Medusa (MML), Orbital (OEC), Alexium (AJX), Rewardle (RXH), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Carnarvon Petroleum (CVR)