Market Update & Important Indicators
The U.S. stock market ended a volatile session on Wednesday slightly higher with the Dow Jones Industrial Average closing at a record level for the first time this year. The Dow rose 45.47 points, or 0.3%, to 16,580.84. The blue-chip index gained 1.6% over the past month. The S&P 500 ended the day 5.62 points, or 0.3%, higher at 1,883.95 and rose 1.4% over the month.
European stocks slipped, led by losses for shares of BNP Paribas SA and GlaxoSmithKline. The Stoxx Europe 600 shed 0.1% to 337.89. In country-specific indexes, the U.K.'s FTSE 100 closed up 0.2% at 6,780.03. Germany's DAX 30 rose 0.2% to 9,603.23, while France's CAC 40 gave up 0.2% to 4,487.39.
Japanese stocks ended slightly higher in a choppy session after the Bank of Japan stood pat on policy, while Hong Kong stocks saw a sharp loss. The Nikkei, which reopened after Tuesday's public holiday, flipped between positive and negative territory to end up 0.1% at 14304.11.
Base metals on the London Metal Exchange closed mostly lower, after weaker-than-expected growth figures out of the U.S. dented prospects for demand from the nation, the world's second-largest consumer of flagship LME metal copper. Copper and tin both ended the session 1.1% lower. Gold slipped 0.4% to US$1,291.3/oz and WTI crude lost 1.5% to US$99.74/bbl. The AUD is buying US$0.928.
In This Issue
Independence Group (IGO)
Independence Group (IGO) reported a steady March Q with Tropicana Gold achieving nameplate throughput, Long Nickel on track to beat guidance and Jaguar Copper/Zinc impacted by an unplanned outage. Tropicana (AngloGold Ashanti 70%: IGO 30%) produced 120.6koz gold (IGO attributable 36.9koz) at an all in sustaining cost (AISC) of $750/oz. Long produced 2.6kt nickel at a $3.80/lb cash cost and is track to beat both production and cost guidance of 9.0-10.0kt at $4.30-4.70/lb. As previously announced, Jaguar incurred a bearing failure in the SAG mill resulting in a 17 day outage and is expected to miss zinc production guidance (43.0-45.0kt) by ~10%. IGO reported a cash balance of $47.4m and debt of $50.4m (vs $45.8m cash, $63.7m debt at December 31).
Northern Star (NST)
Northern Star (NST) reported group production of 50koz @ at an “all-in” sustaining cost (AISC) of $1,167/oz sold, equivalent to ~$1,180/oz produced (Argonaut estimate) before stockpile adjustments. This result demonstrated several recently acquired operations (particularly Plutonic and Kanowna Belle) have significant room for improvement on the production and cost fronts. Whilst patience is required and Argonaut does not anticipate meaningful FCF in the next Q, NST has transformed into a 350kozpa, Australia domiciled producer, significantly enhancing its investment appeal. Near term catalyst include improved operating / cost parameters and Resource / Reserve updates, particularly at the high grade Pegasus deposit. Argonaut’s valuation reduces to $1.20 following adjustments to production forecasts and factoring in higher restructures costs. Recommendation revised to HOLD.
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Argonaut’s Stock Coverage & Recommendations
Recent Contacts & Presentations
Orocobre (ORE), Northern Star (NST), Mermaid Marine (MRM), Fleetwood (FWD), Vmoto (VMT), Kibaran Resources (KNL), Gage Roads (GRB), TFS Corporation (TFC), American Patriot (AOW), Panoramic (PAN), Renascor Resources (RNU), 99 Wuxian (NNW), Strata-X (SXA), Matsa Resources (MAT), Doray Minerals (DRM), Mithril Resources (MTH), Southern Cross Electrical (SXE), Matrix Composites and Engineering (MCE), CTI Logistics (CLX), Windward Resources (WIN), Mawson West (MWE), Mineral Resources (MIN), NRW Holdings (NWH)
Please read Argonaut's Important Disclaimers & disclosures
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