Market Update & Important Indicators:
U.S. stocks edged back from historical highs on Tuesday following mixed signals from Federal Reserve officials about the course of interest rates. New York Fed President William Dudley said in a television interview that the economy should strengthen later in the year and that the U.S. presidential race won't affect the Fed's decisions on the course of rates. The Fed on Wednesday is scheduled to release minutes of its most recent meeting. However, a paper released by San Francisco Fed President John Williams suggested a possible increase to the inflation target, which would give the bank room to keep rates lower for longer. Data on Tuesday showed U.S. consumer prices were flat in July, a signal that inflation remains modest. Stocks sensitive to changes in interest rates, such as telecommunications companies, were among the biggest decliners in the S&P 500.
European stocks closed lower Tuesday, but gains within the commodities group kept the decline somewhat in check. The Stoxx Europe 600 fell 0.8% to 343.32, with only the basic materials and oil and gas sectors advancing.
Shares in Asia were mixed on Tuesday, with record levels seen in the U.S. market overnight offset by a dip in oil prices and a much stronger yen. The yen moves drove the Nikkei Stock Average down 1.6% for the day. Taiwan's Taiex ended down 0.4%, while the Hang Seng Index lost 0.1% and Korea's Kospi also closed 0.1% lower. The market had earlier attempted to shrug off Japan's disappointing gross-domestic-product data for the April-June quarter released on Monday, which weighed in at 0.2%, below an expected 0.7% expansion. The Shanghai market erased earlier gains as investors took profits in financial blue-chips. The benchmark Shanghai Composite Index closed down 0.5%.
Australian shares reversed the previous day's gains Tuesday, easing as investors focused on a mixed batch of earnings reports. Despite a firmer start to the day and strong gains by resources stocks, the S&P/ASX 200 drifted over the session and finished 0.1% lower at 5532. "The Australian share market is on hold today as company results jostle each other for attention and investors await the yearly report from the world's largest listed mining company, BHP," said Michael McCarthy, chief market analyst at CMC Markets in Sydney.
Copper prices rose on Tuesday, lifted by a weaker dollar and stronger oil prices. The London Metal Exchange's three-month copper contract settled up 0.9% at $4,811/t at the PM kerb close. Other base metals were mixed. Aluminium settled up 1.1% at $1,683/t, tin rose 0.9% to $18,393/t, lead gained 0.4% to settle at $1,866/t, nickel fell 2.5% to $10,209/t, and zinc settled down 0.4% at $2,251/t.
In this Issue:
Evolution Mining (EVN) | Sale of Pajingo | HOLD
Market cap $3,891m | Current Price $2.65 | Valuation $2.26
Evolution Mining (EVN) announced it has entered into a binding agreement to sell its Pajingo Gold Mine in North Queensland for total proceeds of A$52m. The sale will be to Minjar Gold, a Shanghai listed company involved in property and mining. As a result of the sale EVN has revised its FY17 gold production to 745-800koz Au (from 800-860koz Au) at an all-in sustaining cost of A$970-A$1030/oz (from A$985-A$1045/oz). The deal consists of an upfront payment of A$42m plus a 1% net smelter return (NSR) royalty of up to A$10m for gold production above 130koz. The sale price of A$52m (4cps) is significantly less than our NPV based valuation of A$177m (12cps), but we ascribe this to our modelling of a 4-year mine life vs two years of reserves.
Recent Contacts & Presentations:
Dacian Gold (DCN), Pilbara Minerals (PLS), Independence Group (IGO), Rio Tinto (RIO), Silver Lake Resources (SLR), Lynas Corporation (LYC), Evolution Mining (EVN), Regis Resources (RRL), Xanadu Mines (XAM), Mincor Resources NL (MCR) , Carbine Resources Ltd (CRB), Antipa Minerals (AZY), Energia Minerals Ltd (EMX), Pantoro Limited (PNR), Boss Resources Ltd (BOE), Metro Mining Ltd (MMI), Metal Bank Ltd (MBK), Actinogen Medical (ACW), St. George Mining Ltd (SGQ), Resapp Health Ltd (RAP), Orecorp Limited (ORR), Dimerix Limited (DXB), Genesis Minerals Ltd (GMD), Dakota Minerals Ltd (DKO), Breaker Resources NL (BRB), Bard1 Life Sciences Ltd (BD1)