Market Update & Important Indicators
Rising technology and energy shares pushed the S&P 500 higher Monday ahead of a series of central bank meetings around the world this week. Stock gains were scattered, with six of the S&P 500's 11 sectors recently higher for the day. Shares of oil-and-gas companies led advances in the broad index, rallying as U.S. crude oil prices climbed, while consumer staples stocks fell 0.3% in the S&P 500, among the worst-performing sectors in the index. Meanwhile, rising technology shares lifted the Nasdaq past other major indexes, with Apple jumping 1.9%, Nvidia up 1% and Facebook adding 0.5%. The S&P 500 climbed 0.2%, heading toward a fresh record close. The Nasdaq Composite rose 0.5% while the Dow Jones Industrial Average added 0.2%. Later this week, investors' attention will turn to the Federal Reserve, which is set to hold its final policy meeting of the year. With many expecting the central bank to raise interest rates Wednesday, the focus should shift to the Fed's economic and rates projections for 2018, analysts said. The European Central Bank and Bank of England also hold policy meetings on Thursday. Few market participants expect any changes to be announced at this juncture but investors will also watch for clues into their analyses of the years ahead, with the ECB set to release forecasts for 2020 for the first time. The U.S. gold price traded lower overnight, slipping 0.6% to close at 1,241.20 US$/oz.
European stocks closed slightly lower Monday, pulling back from a one-month high as technology stocks sagged. But U.K. stocks bucked that trend as continued pressure on the pound helped the British blue-chip index outperform its regional rivals. The Stoxx Europe 600 finished down by less than 0.1% at 389.05 after opening modestly higher. Germany's DAX 30 index ended down 0.2% at 13,123.65, and France's CAC 40 edged lower by 0.2% to close at 5,386.83. But the U.K.'s FTSE 100 bucked the negative trend. It tacked on 0.8% to finish at 7,453.48, aided by a continued fall in the pound's value.
Asian stocks strengthened Monday after a quiet start, building on Friday's global rally. Hong Kong's Hang Seng Index was recently up 1.2%, while in China, the Shenzhen Composite Index climbed 1.5% and Shanghai stocks rose 1%. Japanese stocks perked up after the lunch break, with the Nikkei Stock Average rising 0.6%.
Australian stocks were barely higher most of the day and finished there, helped by resources stocks following end-of-week gains in commodity prices. The S&P/ASX 200 settled up 3.9 points at 5998.3 even as Mineral Resources sank 8.2% after making a rival offer for AWE, which jumped 16%. Meanwhile, CBA rose for a 3rd-straight session – like the ASX 200 – even as fellow bank majors fell slightly.
The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 1.5% to finish at $6,670/t. The other base metals finished mostly higher. Aluminium prices added 0.4% to close at 2,001/t, whilst Lead prices gained 1.9% to close at 2,494/t. Zinc prices traded 1.3% higher, closing at 3,130/t, whilst Nickel prices traded strongest, rebounding 2.6% to 11,177/t. Tin prices bucked the trend, closing 0.2% lower at 19,477/t.
In this issue
Argonaut Metals and Mining | Best Undeveloped Projects 2017
Argonaut has completed its 2017 review of the best undeveloped metals and mining projects owned by ASX listed companies. A number of the projects identified in our previous editions are now either in production, being developed, or have been acquired or partnered. As per last year, we have been unable to identify a project satisfying our criteria that resides in an ASX major, with all the projects in mid-tiers, aspiring juniors or small-cap companies.
Argonaut continues to use the following selection criteria to identify what we consider to be the Best Undeveloped Projects (BUP), which include:
1. Development stage between scoping study and pre-commercial production
2. An Internal Rate of Return (IRR) exceeding 25%
3. Profitable through all market/commodity price cycles
4. A high likelihood of achieving >$100m project valuation within 24 months
Tox Free Solutions (TOX) | Attractive bid | HOLD
Market Cap $661m | Current Price $3.40 | Pre-Bid Valuation $2.15 | Target / Bid Price $3.425
Over recent years TOX has gone from a small WA operation to a diversified Australia-wide business. These efforts have improved its attractiveness (if not yet EPS), culminating in a bid today from Cleanaway (CWY). The sound strategic fit and significant synergies has allowed for a compelling cash offer of $3.425; a 27.8x multiple of FY17 net earnings, and well ahead of our standalone valuation and recent trades. TOX directors recommend the Scheme which, if it concludes, will be an excellent result for shareholders. We think there is limited risk to the transaction and expect TOX to trade at levels near the bid price.
Recent Contacts & Presentations
Walkabout Resources Ltd (WKT), Marindi Metals Ltd (MZN), Volt Power Group Ltd (VPR), PharmAust Ltd (PAA), Alice Queen Ltd (AQX), Jervois Mining Ltd (JRV), St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM)