Market Update & Important Indicators
U.S. stocks wavered, erasing earlier gains, as investors welcomed continued easy-money policies but remained cautious as central bank officials noted concerns about global market turmoil. The Federal Reserve left short-term interest rates unchanged after weeks of market-churning debate at the central bank about whether it was time to end an era of near-zero rates. Many investors remained cautious, however, as central bank officials noted concerns about weakness in global economies and markets. Investors around the world have been closely watching the central bank's decision on short-term rates, which have been near zero since the financial crisis in a bid to stoke growth and borrowing. That stance has helped propel a six-year-long bull market in stocks and bonds. But expectations of a rate increase on Thursday had diminished in recent weeks amid a stumble in global financial markets. Stocks rose this week on anticipation that the Fed would stand firm.
The Stoxx Europe 600 shed 0.2% to 361.21, but the loss was limited by gains for the utilities and consumer goods sectors. On the national indexes, Germany's DAX 30 edged up 2.4 points to 10,229.58, while the U.K.'s FTSE 100 fell 0.7% to 6,186.99. France's CAC 40 edged up 0.2% at 4,655.14, but Swiss shares ended 0.3% lower at8,849.43. Ending solidly higher was Spain's IBEX 35, notching a 1.3% rise to 10,106.60.
Asian markets rose on expectations that the U.S. wouldn't raise interest rates Thursday, even as shares in China took a late-afternoon drop Thursday and dragged Hong Kong stocks lower. The Shanghai Composite Index closed down 2.1%, with most of drop happening in the last half-hour of trade. The Hang Seng Index closed down 0.5%. Beijing-backed funds, which are known to operate in the afternoon, didn't appear to be present in the domestic market, sparking sales by investors. Chinese markets have seen frequent late-session surges or drops recently. China's market also continues to be plagued by uncertainty over how aggressively the government wants to clamp down on illegal trading and what it deems "abnormal" practices.
LME metals were mixed with copper up 0.3%. Gold rose 1.1% to US$1,131/oz, while Brent declined to US$49.08/bbl. The AUD is buying US$0.717.
In This Issue
Dacian (DCN) | SPEC BUY
Dacian Gold (DCN) released a Resource update at Mt Morgans (see contributors below). Whilst there is no significant change in the size of the 3.0Moz inventory, the overall grade has improved by 10% to 2.2g/t (was 2.0g/t). As anticipated, this Resource update has factored in additional mineralisation from Ganymede (+108koz) and Footwall BIF (+26koz). The updated Resource was completed by consultant RungePincockMinarco, and will be used in the upcoming Scoping Study, due later this month. The re-estimation of the Transvaal deposit using a 2.0g/t cut-off (was 0.5g/t) significantly improved the quality of the ounces to 210koz @ 5.2g/t (was 327koz @ 2.8g/t). Given this increase, Transvaal may feature in the upcoming Scoping Study, likely providing a better NPV. Given scalable inventory and proximity to infrastructure, DCN is likely to attract corporate attention. The stock remains one of Argonaut’s preferred gold development stocks given AUD denominated costs, exploration upside and proven management. Argonaut maintains a SPEC BUY recommendation and A$0.70 target price.
Gold Road (GOR) | SPEC BUY
Gold Road (GOR) released an updated Resource at Gruyere, increasing the inventory to 5.62Moz @ 1.36g/t (was 5.51Moz @ 1.24g/t), incorporating additional, higher grade drilling results and improved estimation techniques (see below). This updated Resource will be incorporated into the upcoming PFS, due early CY16, and likely result in an improved head grade. The Resource estimate was completed in-house, and independently audited by Optiro. Accounting for the better grades (an increase in diluted head grade of 0.05g/t to 1.20g/t) and a marginally higher strip ratio improves our valuation to A$0.70 (was A$0.66). Argonaut maintains a SPECULATIVE BUY recommendation.
Recent Contacts & Presentations
Gold Road (GOR), Tox Free Solutions (TOX), AWE Limited (AWE), Ausdrill (ASL), GR Engineering (GNG), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), FAR Limited (FAR), Central Petroleum (CTP), Senex Energy (SXY), Ironbark Zinc (IBG)