Market Update & Important Indicators
U.S. stocks rose Tuesday as Federal Reserve Chairwoman Janet Yellen noted the recent improvement in the U.S. economy during semiannual testimony before Congress. In prepared remarks to the Senate Banking Committee, Ms. Yellen said if the economy keeps improving as the Fed anticipates, the central bank "will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis." Ms. Yellen also said that the Fed's "patient" stance means that it won't raise rates for at least the next couple of meetings, likely holding market expectations for a midyear rate increase. The Dow Jones Industrial Average advanced buoyed by a rise in Home Depot Inc. shares.Europe's benchmark stock index closed at the highest level in more than seven years on Tuesday, as European officials approved an extension of Greece's bailout. Greece's Athex Composite surged 9.8% to end at 937.96, closing at the highest level since December, and outperforming the broader European equity market. The Stoxx Europe 600 tacked on 0.6% to 387.25, marking the highest close since October 2007. The pan-European benchmark also logged a six-day winning streak. Germany's DAX 30 climbed 0.7% to 11,205.74, its 16th record high of the year. It was also a record day for the U.K.'s FTSE 100 that picked up 0.5% to 6,949.63, for the highest close on record.
Stocks in most Asian markets were higher on Tuesday, despite uncertainty in Greece and caution ahead of testimony from U.S. Federal Reserve Chairwoman Janet Yellen. Benchmark indexes from Japan to Australia edged up, with the Nikkei Stock Average finishing up 0.7% to 18603.48, renewing another 15-year high. Taiwan's Taiex closed up 1.1% at 9629.37, a nearly eight-year high. Hong Kong's Hang Seng Index slipped 0.4% to 24750.07, while China's mainland markets remained closed for the Lunar New Year holiday.
LME metals all finished stronger. Brent crude dropped 0.5% to $58.63/bbl and gold is flat at $1,201/oz.
In This Issue
Argonaut’s site visit to Doray Minerals’ (DRM) Andy Well mine confirmed the operation is delivering better dilution controls following the adoption of the reverse Avoca mining method and is on track to achieve FY15 guidance. The high grade Stage II open pit (16.1g/t Reserve grade) has commenced and will underpin the Company’s cost / cash flow in subsequent Qs. The successful bid for Mutiny Gold (MYG) will see DRM’s production profile double, increasing the stock’s investment appeal and addressing queries over Reserve / mine life. The acquisition is accretive on several fronts and improves on DRM’s liquidity.
BC Iron (BCI)
BC Iron (BCI) released December H financials with an underlying net loss after tax of $18.4m (-$96.3m after a $100m impairment), vs Argonaut’s forecast of $-4.5m and $10.7m for the June H 2014. Revenue was down 22% H-on-H driven by a 32% decrease in the realised price for Bonnie Fines product. The net loss was further impacted by higher cash costs attributed to clay issues which decreased production at the Nullagine Joint Venture (NJV BCI: 75%, FMG: 25%) for the greater part of H1 FY15.
Tox Free (TOX)
TOX reported an impressive 1H result, as guided to in the last update. Earnings growth was driven by factors including higher volumes at Gorgon and on the East Coast and civil infrastructure improvements.
CTI Logistics (CLX)
Given guidance was provided in December, we were not expecting any major surprises in CLX’s 1H15 results. It turns out they came in a bit better than suggested, albeit still soft on the back of tough conditions in the Logistics segment. Conditions are likely to remain subdued and near term earnings impacted by the debt funded acquisition of further land at Hazelmere.
Recent Contacts & Presentations
Northern Star (NST), Saracen (SAR), Doray (DRM), Troy (TRY), Resolute (RSG), Gold Road (GOR), Regis (RRL), Independence Group (IGO), Energia Minerals (EMX), OBJ Limited (OBJ), Gage Roads (GRB), Rewardle (RXH), Doray (DRM), Alexium (AJX), Orbital (OEC), IMF Bentham (IMF), Metals X (MLX), Pura Vida (PVD), Image Resources (IMA), Tangiers (TPT), ABM Resources (ABU), Centaurus (CTM), Imdex (IMD), Rox (RXL)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF