Market Update & Important Indicators
U.S. stocks fell, led by declines in the telecommunications and utilities shares. Those two sectors, considered relatively stable and safe, have risen the most in the S&P 500 over the past 12 months. Their declines Thursday helped push the Dow industrials below 18000, after the index this week closed above the milestone for the first time since July. The declines came as the number of U.S. workers who applied for unemployment benefits fell to the lowest level in 43 years, a sign of ongoing strength in the labour market. Initial claims for jobless benefits fell by 6,000 to a seasonally-adjusted 247,000 in the week ended April 16, the Labor Department said.
European stock markets ended a up-and-down session modestly lower, after the European Central Bank reaffirmed its commitment to tackle low inflation and flagging growth, but stopped short of hinting at any further stimulus measures. The Stoxx Europe 600 index closed down 0.3% at 349.59, easing back from a three-day winning run. The benchmark closed at its highest level since early January on Wednesday.
Japan's Nikkei Stock Average ended up 2.7%–the third consecutive day of gains. If it can keep up the pace Friday, it would notch a second straight week of gains. The Tokyo benchmark also reached its highest level since Feb. 2, meaning stocks are on track to recoup nearly all of their losses since Japan's central bank stunned markets by adopting negative interest rates on Jan. 29. Elsewhere in Asia, most stock markets rose. Korea's Kospi gained 0.8%, and Hong Kong's Hang Seng Index finished up 1.8%. China was the exception, with the Shanghai Composite Index ending down 0.6%. Trading was choppy in China in a tug-of-war between rising spirits over fresh liquidity and disappointment over a signal that authorities could pull back from monetary stimulus.
Australia's equities market was driven to its highest close of the year Thursday, buoyed by heightened investor optimism as crude-oil prices continue to rebound. Rising for a third straight day, the S&P/ASX 200 rose 56.7 points, or 1.1%, to 5272.7–the highest finishing level since the end of December. The index is now up 3.7% so far this month, and 11% above its mid-February 2016 low. Energy stocks were again the main driver of the day's performance, rising 5.7% as most industry sectors advanced.
South32's shares gained 8% after it reported mixed production in the latest quarter but said its cost-cutting efforts were on track. Iron-ore producers BHP Billiton, Rio Tinto and Fortescue Metals Group rose 3.5%, 2.4% and 4.6%, respectively. The major banks were each higher, led by a 1.7% increase in Australia & New Zealand Banking. Commonwealth Bank of Australia, Westpac and National Australia Bank were each up 1.3%.
The London Metal Exchange's three-month copper contract was up 0.38% at $5,000 a metric ton at the PM kerb close, reflecting a drawdown after prices rose swiftly following the announcement. Among the other base metals, aluminum was up 0.6% at $1,626 a ton, zinc was down 1.1% at $1,905 a ton, nickel was down 2.4% at $9,069 a ton, lead was up 0.50% at $1,780 a ton and tin was down 0.2% at $17,200 a ton.
In This Issue
Evolution (EVN) |The good, the bad and the necessary evil |HOLD
Market Cap $2636m | Current Price $1.80 | Valuation $1.90
Evolution Mining (EVN), delivered a record Q with group production of 209koz produced (previously announced) at an all-in Cost (AIC) A$1,125/oz. Normalised FCF is estimated at A$95.8m, or ~A$460/oz, adjusted for working capital movement, acquisition and integration costs, and interest expense. The March Q result highlighted the benefit of a diversified asset base from recently acquired assets, in particular Cowal. The Company also delivered Resource and Reserve upgrades, increasing its Reserve base to 5.85Moz (was 5.20Moz). Argonaut’s valuation increases to A$1.90 (was A$1.80) based on the updated Reserves. HOLD maintained.
OZ Minerals (OZL) |Exploration high on the agenda |HOLD
Market Cap $1711.6m | Current Price $5.64 | Valuation 5.15
OZ minerals (OZL) delivered March Q results with 31kt copper and 28koz gold, in line with Argonaut’s forecast of 31kt copper and below our forecast of 32koz gold. C1 costs of US$0.75 were within the guidance range (US$0.70-0.80/lb). Cash at March 31 was $533m after a $43m dividend payment and $40m build in working capital related to a 10kt post quarter shipment. OZL is fast tracking exploration of the Eloise JV to follow up highly prospective IP targets. Resource definition drilling is also continuing at Prominent Hill following a recent intercept of 69m at 3.2% copper. Argonaut maintains a HOLD recommendation and a $5.15 target price.
Recent Contacts & Presentations
Red 5 (RED), Medusa Mining (MML), Saracen Mineral Holdings (SAR), Paradigm BioPharmaceuticals (PAR), Pilbara Minerals (PLS), Energia Minerals (EMX), Deep Yellow (DYL), Paladin Energy (PDN), Kidman Resources (KDR), Dakota Minerals (DKO), West Africa Resources (WAF), Finders (FND), Credo Resources (CRQ) , Orthocell (OCC), Capricorn Metals (CMM), Gold Road Resources (GOR), SRG (STS), Reward (RWD), Agrimin (AMN), Decimal (DSX), SRG Limited (STS), Peet (PPC)