Market Update & Important Indicators
The Dow Jones Industrial Average eked out another record close Friday, as U.S. stocks posted their third straight week of gains. Many investors said this week marked a decisive turnaround for risky assets, which had fallen sharply after the U.K. voted to leave the European Union on June 23. U.S. stocks surged on expectations that central banks would extend a period of low interest rates and stimulus, and upbeat U.S. economic data. Investors began to put money back into riskier assets like stocks, an encouraging sign to those who had worried about the stream of money exiting equity funds this year. While mutual-fund investors yanked money out of U.S. equity funds for most of the year, in the seven days leading up to Wednesday they poured a net $7.8 billion into such funds.
European shares fell Friday, dragged down by travel and leisure shares, which fell after a deadly terror attack in France. France's CAC 40 fell 0.3% and the Stoxx Europe 600 slipped 0.2%.
Japanese stocks on Friday notched their best week in six-and-a-half years, leading gains across Asia amid relief over a weakening yen and signs of economic recovery in China. Japan's Nikkei Stock Average ended up 0.7%, gaining 9.2% over the week. It was the best weekly advance since early December 2009, when it rose 10.4% in a week. Gains came as the Japanese yen weakened sharply. Japanese shares typically rise when the currency depreciates, on the view that a weaker yen makes Japanese exports more competitive abroad. Investors' hopes for an expansive fiscal-stimulus package and central-bank easing–including persistent chatter about the possibility of a radical money-printing plan known as "helicopter money"–have propelled Japanese stocks through the week. Elsewhere in the Asia-Pacific region, Korea's Kospi gained 0.4%, Hong Kong's Hang Seng Index rose 0.5% and China's Shanghai Composite ended essentially flat.
Australian shares carried momentum through a seventh straight session, rising to close out the week at an 11-month high as banks continued to rebound and energy stocks benefited from a recovery in oil prices. It has been the longest run higher for the local market since late December, climbing back from losses last week in the wake of Britain's vote to leave the European Union. Sentiment has been buoyed of late by fresh record highs for U.S. stock indexes and investor expectation that governments and central banks will seek to reassure markets and provide stimulus. Although off its highs of the day, the S&P/ASX 200 ended Friday with a rise of 18 points, or 0.3%, to 5429.6–its highest finish since Aug. 11. That marked a 3.8% rally for the week, after dipping last week, and leaves the index 2.5% higher for the year so far. The ASX 200 touched a fresh 2016 high above 5452, before fading through the afternoon.
Copper futures closed lower in London on Friday on profit-taking after more than a week of gains. The London Metal Exchange's three-month copper contract was down 0.45% at $4,918/t at the PM kerb close, after trading higher much on the day. Other base metals were mixed. Aluminium closed down 1.0% at $1,655/t, zinc was up 0.7% at $2,201/t, nickel was down 0.8% at $10,239/t, lead was down 1.3% at $1,867/t, and tin was up 0.3% at $18,122/t.
In this Issue
Berkeley Energia (BKY) | DFS: Strong margins at suppressed U prices | BUY
Market Cap $137m | Current Price $0.69 | Valuation $2.05
Berkeley Energia (BKY) released a Definitive Feasibility Study (DFS) on its 100% owned Salamanca uranium project in Spain. Salamanca is a standout uranium project with a significant production profile, near term development potential and the capability to generate strong margins even in the current suppressed uranium market. The study outlined average steady state production of 4.4Mlbpa with US$95.7m upfront capex and all-in life of mine (LOM) operating costs of US$17/lb. The project has potential to generate ~100% EBITDA margins against an estimated current realised price of US$38/lb (80:20 blend of long-term and spot pricing). First production is slated for early 2018. BUY recommendation maintained with a $2.05 valuation. Our revised model applies lower opex, higher total capex and a lower long term price (down from US$70/lb to US$65/lb).
Recent Contacts & Presentations
Altech Chemicals (ATC), TFS Corporation Limited (TFC), Noxopharm (NOX), OBJ Limited (OBJ), Kibaran (KNL), Department 13 (D13), Peak Resources (PEK), Fortescue Metals (FMG), Paradigm Biopharma (PAR), Botanix (BOT), Peel Mining (PEX), Ausgold Limited (AUC), Gascoyne Resources (GCY), Metro Mining (MMI), Pacific Energy (PEA), Novatti Group Ltd (NOV), Hammer Metals Ltd (HMX), Helix Resources Ltd (HLX)
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