Market Update & Important Indicators:
U.S. stocks rose intraday following Federal Reserve Chairman Jerome Powell's Senate testimony, while investors also continued dissecting the latest round of corporate earnings results. The Dow Jones Industrial Average added 56 points, or 0.2%, to 25120. The S&P 500 rose 0.4% and the tech-focused Nasdaq Composite climbed 0.6%. Mr. Powell told Congress that strong economic growth and stable inflation should keep the central bank on track to gradually raise short-term interest rates. He added he wants inflation to stay around 2% and that the economy is "just shy" of hitting that point. He also touched on trade tensions, saying he thought countries that are open to trade have grown more quickly and commented on the new tax law, saying it was too early to see its impact. Mr. Powell's remarks were made before the Senate Banking Committee, as part of his semi-annual monetary policy report. Derivatives markets were pricing in a 62% chance that rates will rise at least twice more this year, according to data by CME Group. The US gold price lost 1.0% to finish at 1227.2 US$/oz.
The Stoxx Europe 600 index closed up 0.2% at 384.98, helped by falls in the euro and the pound against a broadly stronger dollar after Federal Reserve Chairman Jerome Powell was positive on the near-term outlook for the economy in testimony to Congress. A 9.1% jump in shares of German engineering and steel giant Thyssenkrupp also lent a boost to the pan-European index and helped Germany's DAX index end up 0.8%. The gains follow the resignation of supervisory chairman Ulrich Lehner, which fueled investor hopes that the company will expand restructuring efforts. A weaker pound also helped U.K. shares, with the FTSE 100 index ending up 0.3%. France's CAC 40 closed up 0.2% and Italy's FTSE MIB was up 0.7%, though Spain's Ibex 35 only edged into positive territory.
Amid a second day of broad declines for Asian equities after last week's rebound, Japan stood out. Stocks there didn't just rise but did so after a holiday Monday that likely should have exposed the market to catch-up selling. Meanwhile, the yen hasn't weakened broadly further to start this week, meaning equities didn't really have that tailwind to ride. Southeast Asian stocks generally held up, though Indonesia's benchmark was down nearly 1% after spiking about that much at the close Monday. Japan's Nikkei Stock Average closed up 0.4%, helped by a weak yen, but Hong Kong's Hang Seng and the Shanghai Composite were down 1.3% and 0.6%, respectively.
Australian stocks finished near session lows in falling again, with the S&P/ASX 200 off 0.6% to 6203.6. Leading was a 2.2% drop in the energy sector on oil's overnight slump. Major banks were among the few stocks to soften the day's weakness as CBA, Westpac and NAB notched modest rebounds after two days of selling.
Base metal prices were mixed on the London Metal Exchange. The largest declines were seen in aluminium and nickel, down 1.9% and 1.3% respectively. The 3-month copper contract lost 0.8% to finish at 6,116/t, as lead fell 1.3% to 13,393/t. Tin and zinc were both up, with zinc gaining 1.3% to end at 2,534/t.
In this issue:
Myanmar Metals (MYL) | Sizing-up a World Class Mine | SPEC BUY
Market Cap $84m | Current Price $0.07 | Target Price $ 0.22
Myanmar Metals (MYL) recently conducted an $35m equity raising (at $0.06/sh) to fund the exercise of the Bawdwin mine option ($14.9m) and to complete feasibility studies. MYL has hit the ground running releasing an updated resource with a 23% increase in Indicated Resources to 25Mt @ 4.3oz/t Ag, 7.9% Zn+Pb and 0.2% Cu. Argonaut regards Arizona Mining’s (TSX:AZ) Taylor deposit as the closest analogy to Bawdwin. AZ was recently acquired by South 32 (ASX:S32) for a total consideration of ~US$$1.4b. We calculate a see-through valuation for MYL of $0.38/sh based on an EV/Resource multiple (contained Zn equivalent). A comparison of the Bawdwin and Taylor deposits is provided in the linked report.
Saracen Mineral Holdings (SAR) | FY18 strong finish, FY19 production rising | SELL
Market Cap $1,685m | Current Price $2.07 | Target Price $ 1.85
Saracen (SAR) produced a strong June Q to close out the year with 316koz gold production at an AISC of A$1,139, ahead of revised guidance 310-315koz @ A$1,100-1,150/oz. Production for the June Q was 78.9koz at an AISC of A$1,196. The results were in-line with Argonaut’s forecasts of 316koz for the full year and 78.5koz for the June Q. Production is set to rise in FY19 with guidance set at 325-345koz at A$1,050-1,100/oz AISC, below our prior prediction of 352koz @ A$950/oz. The Company added $29.3m net mine cash flow, increasing cash and liquid assets to $118.3m at June 30 (vs Argonaut forecast of $112.7m and March 31 at $101.5m). Maintain SELL recommendation with a $1.85 target price.
Recent Contacts & Presentations:
Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1), Peel Mining (PEX), Catalyst Metals (CYL), Vault Intelligence (VLT), Doray Minerals (DRM), Nzuri Coppoer (NZC), Bowen Coking Coal (BCB), Phosphagenics Limited (POH) Great Boulder Resources (GBR), Orthocell (OCC), Northern Minerals (NTU), ABM Resources Ltd (ABU), Vital Metals Ltd (VML), Todd River Resources Ltd (TRT), Pacific Energy Ltd (PEA), Carnarvon Petroleum Ltd (CVN), Australian Mines Ltd (AUZ), Australian Finance Group (AFG), Paladin Energy Ltd (PDN), Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SHE)