Market Update & Important Indicators
U.S. stocks were little changed, as investors focused on U.S. growth after two days of concerns about China. China's unexpected move to weaken its currency, which signaled Beijing's increasing worries about slow growth, weighed on markets earlier this week. The Dow gained just 0.03% to 17,408 and the S&P 500 fell 0.13% to 2,083.Australian stocks lost steam toward the end of Thursday's session, eking out only modest gains despite a recovery in resources and banking shares as investors remained on edge following China's sdevaluation of the yuan. The S&P/ASX 200 rose 0.1% to 5387.9, having been up as much as 0.8%.
Markets across most of Asia staged a relief rally Thursday, three days after China's yuan devaluation. On Thursday, the onshore yuan was down only 0.2% to trade at 6.3982 against the U.S. dollar compared to its previous close, after China's central bank guided the currency lower for a third day. The Nikkei Stock Average closed up 1%, while the Hang Seng Index was up 0.4%. All of those markets rebounded from previous two-day declines. The Shanghai Composite Index closed 1.8% higher.
The pan-European Stoxx Europe 600 closed 1.0% higher after two sessions of heavy losses. Germany's DAX index rose 0.8%, while France's CAC 40 index was up 1.3%.
Metals on the LME were mixed overnight with nickel losing 1.3% to US$4.73/lb, while zinc gained 0.5% to US$0.83.lb. Gold was down 1%, trading at US$1,115/oz and Brent declined 0.7% to US$49.29/bbl. The AUD/USD is trading at 0.74.
In This Issue
Diggers and Dealers 2015 – The Wrap
Argonaut attended the annual Diggers and Dealers conference in Kalgoorlie. During this time we visited a number of projects including; Anglo Gold/Independence Group’s (IGO) Tropicana, Dacian’s (DCN) Mt Morgans, Evolution’s (EVN) Mungari, Gold Roads’s (GOR) Gruyere, Northern Star’s (NST) Paulsens and Kundana, Sandfires (SFR) DeGrussa, Sarasen’s (SAR) Thunderbox and Sirius’ Nova. In this report we detail the highlights of the conference and site visits attended.
Sandfire Resources (SFR) | BUY
Sandfire Resources (SFR) announced assay grades for RC hole TLRC0004 with 18m at 5.7% Cu and 2.4g/t Au from 107m and 4.0m at 4.2% Cu and 0.7g/t Au from 158m. This RC hole was drilled ~135m along strike from diamond hole TLDD0005 (hole 5) which intercepted 9.2m at 11.8% Cu and 2.9g/t Au from 417m. While the grade of the intercept is lower than previous Monty intercepts, it is in line with the DeGrussa Resource (5.7% Cu and 2.0g/t). Evidence of a fault zone logged in hole TLDD0006 between 407m and 446m suggest that the mineralisation in RC hole 4 is a fault offset of the deeper mineralisation. This shallower zone could significantly reduce development capital should the discovery be proven economic.
Dacian Gold (DCN) | SPEC BUY
Dacian Gold (DCN) recently delivered a Resource upgrade at Mt Morgans, boosting group inventory to 3.1Moz @ 2.0g/t. Having defined a substantial Resource base, the project is advancing towards the study phases (PFS completion due mid CY16), potentially delivering a ~200kozpa development project. Given the scalable inventory and proximity to infrastructure, the asset is also likely to attract corporate attention with further development. DCN is one of Argonaut’s preferred gold development stocks given exposure to AUD denominated costs, exploration upside and proven management. Speculative Buy maintained. Based on the upgraded Resources at Westralia and Jupiter, Argonaut’s target price is A$0.73 (50/50 blended standalone / toll treating).
Recent Contacts & Presentations
Dacian (DCN), Evolution (EVN), Austal (ASB), Resolute (RSG), Pacifico (PMY), Kingsgate (KCN), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), 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), Central Petroleum (CTP), Senex Energy (SXY), Newmont, Coventry (CYY), Energia (EMX)