Market Update & Important Indicators
US stocks eased from the week's highs as traders became cautious ahead of a fraught-filled weekend for Greece and the eurozone. Giving up more than half of the previous session's gains, the Dow Jones Industrial Average lost 101.56 points, or 0.56 per cent, to 8,014.28, and the broad-based S&P 500 fell 11.48 points, or 0.54 per cent, to 2,109.76. After sweeping to a new record on Thursday, the Nasdaq Composite Index shed 15.95 points, or 0.31 per cent, to 5,117. The mild sell-off came as Greece and its official creditors entered the weekend with no deal on more financial aid to Athens in sight, and the cash-short country facing a June 30 deadline to repay 1.5 billion euros ($A2.19 billion) to the International Monetary Fund.
Europe's main stock markets were mixed as the EU warned Greece to accept a debt deal with its international creditors or head towards default. London's benchmark FTSE 100 index edged up 0.04 per cent to 6,710.45 points. In the eurozone, the CAC 40 in Paris added 0.25 per cent to 4,815.37 points while Frankfurt's DAX 30 fell 0.54 per cent to 11,040.10 points.
Asian markets mostly rose after a record close on Wall Street, and as the euro continued to defy mounting fears about Greece's future in the eurozone, though Shanghai plunged more than six per cent on tight liquidity. The yen edged down after the Bank of Japan held off on any new stimulus measures at its latest policy meeting despite flatlining inflation, and Tokyo ended 0.91 per cent higher, adding 183.42 points to 20,174.24. Seoul gained 0.25 per cent, or 5.08 points, to 2046.96, Hong Kong added 0.25 per cent, or 65.87 points, to 26,760.53, while Shanghai tumbled 6.42 per cent, or 306.99 points, to
4478.36.
The Australian market looks set for a steady start to the week, as Greece and European leaders continues to work towards ending the country's debt crisis. At 0704 AEST on Monday, the September share price index futures contract was down three points at 5,538. Wall Street fell on Friday as Greece's debt woes rolled on, but euro zone leaders will meet on Monday to discuss proposals to end the standoff between Athens and its creditors. There is no local economic or company news scheduled for Monday. On Friday, the benchmark S&P/ASX200 index gained 72.1 points, or 1.3 per cent, to 5,597 points and the broader All Ordinaries index added 68.8 points, or 1.25 per cent, to 5,591.5 points.
Metals on the LME were mainly down with Tin the only exception rising 0.2% to US$15,365/t. Copper was the biggest looser falling 1.6% to US$5,642/lb. Gold fell slightly 0.1% to US$1,200/oz and Brent lost 0.5% to US$62.71/bbl.
In This Issue
Carnarvon Petroleum Limited (CVN)
Carnarvon Petroleum Limited (CVN) is focused solely on the West Coast of Australia including the Carnarvon and Roebuck Basins. The recent Phoenix South-1 oil discovery, from the never before targeted Early Triassic oil play in the offshore Roebuck, has opened up a new stratigraphic concept in the area with CVN holding a significant share of acreage.
CVN is in a strong position with A$101m cash, up to US$32m of royalty payments and gross US$70m carry on the upcoming Roc-1 well (spud date Q4 2015) which will test the structure up dip from the Phoenix South-1 oil discovery. In addition, the extensive acreage position in the Phoenix area has numerous follow up prospects with further lead generation expected from the recently acquired seismic data.
RTG Mining (RTG)
RTG Mining delivered an impressive hit of 36m @ 3.34g/t Au, 3.25% Cu from 282m (downhole) at its Mabilo Project (diluting to 58%, Galeo earning 42%). This hit demonstrates the continuation of the mineralisation down plunge and Resource expansion potential. The Mabilo Project differentiates itself by having an exceptional open-pittable grade of 5.7g/t Au Eq and an upfront, DSO component which would significantly reduce pre-development capex. The granting of a Mineral Projection Sharing Agreement (MPSA) will be a key catalyst for the stock. Additional news flow includes ongoing drilling results and a Feasibility Study, expected in the September Q.
Austin Engineering (ANG)
ANG’s operating update yesterday confirms the positive momentum that the Company highlighted last month. It suggests that the deferral of necessary expenditure at operating mines may be nearing an end. Operationally, we believe ANG has turned the corner and that the denominator (EBITDA) in the leverage ratio is moving in the right direction. We now need to see a movement in the numerator (net debt) for value to be unlocked.
Western Areas (WSA)
Western Areas (WSA) has entered into a binding agreement to purchase the Cosmos Nickel Complex from Glencore plc for $24.5m. The asset contains a 450ktpa plant, mine infrastructure and a 7.3Mt at 2.4% Resource. The tenements cover a significant area over the endowed Agnew Wiluna Nickel Belt. Argonaut considers this a strategic, countercyclical, well priced acquisition. At A$0.02/lb, WSA has effectively bought fertile exploration ground with a plant and production Resources included for little added cost.
Argonaut’s Stock Coverage & Recommendations
Recent Contacts & Presentations
Western Areas (WSA), Panoramic Resources (PAN), Northern Star (NST), Regis (RRL), Medusa (MML), Pacific Energy (PEA), Orbital (OEC), Peet (PPC), Alexium (AJX), Austal (ASB), Empired (EPD), Rewardle (RXH), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Carnarvon Petroleum (CVR)
Please read Argonaut's Important Disclaimers & disclosures
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