Market Update & Important Indicators
The Dow industrials rose 119.19 points, or 0.5%, to 24581 Friday but slid 509.59 points, or 2%, for the week. The S&P 500 added 5 points, or 0.2% to 2755 and fell 24.78 points, or 0.9% for the week, while the Nasdaq Composite edged down 20.13 points, or 0.3%, to 7692.82 and lost 53.56 points, or 0.7%, for the week. Stocks got a boost Friday from energy shares, although they weren't enough to offset broad declines throughout the week from other sectors. Dow component Chevron rose $2.51, or 2%, to $125.10 and Exxon Mobil added $1.69, or 2.1%, to $81.38 after members of the Organization of the Petroleum Exporting Countries agreed to a deal to join other big producers in boosting oil production by about 600,000 barrels a day. The move came as a relief to investors who had been expecting the cartel to decide to boost output even further, sending U.S. crude for August delivery up 4.6% to $68.58 a barrel — its biggest one-day percentage gain since 2016. Industrial shares in the S&P 500 rose Friday but posted weekly declines, with Caterpillar down $10.08, or 6.7%, to $139.94 for the week and Boeing losing $18.97, 5.3%, to $338.91 over five sessions. The US gold price gained 0.2% to 1268.90 US$/oz.
The Stoxx Europe 600 closed up 1.1% at 385.01, buoyed by gains in energy stocks after OPEC agreed a production increase. This helped U.K. stocks outperform, with the FTSE 100 index ending up 1.7%. Automakers fell, however, after President Donald Trump threatened tariffs on European Union-made cars. This caused German stocks to underperform, with the DAX index ending up 0.5%. Fiat Chrysler ended down 2.4% and BMW ended down 1.1%. France's CAC 40 closed up 1.3%, while Italy's FTSE MIB was up 1% and Spain's Ibex 35 up 0.9%.
Japan's Nikkei Stock Average fell 0.8% Friday and 1.5% for the week as a stronger Japanese currency and concerns around the impact of trade on multinationals hit the index. Hong Kong's Hang Seng Index was up 0.1% Friday but down 3.2% for the week, while the Shanghai Composite Index edged up 0.5% Friday, paring its weekly decline to 4.4%.
Despite the continued rebound by the big banks, Australian shares came off the boil today to join most regional markets lower after global declines Thursday. Still, the S&P/ASX 200 logged its biggest gain since the weeks after Trump's election at 2.15%. It fell 0.1% today to 6225.2 after consecutive 10 1/2-year closing highs. It would have been much bigger without the 1% jump in the heavily weighted financials. ANZ popped 2.9% as it doubles stock-buyback plans. Energy stocks were among the weakest after Brent's overnight slide–oil has rebounded in Asian trading–while Telstra fell further. It lost 8.8% this week, hitting fresh 7-year lows, on the back of poorly received restructuring plans.
Base metal prices were mainly up on the London Metal Exchange. Aluminium was down to 2,180/t, the 3-month copper contract that rose to 6,792/t. Tin slipped 0.6% to 20,475/t and lead gained 1.8% to 2,406/t. continuing its upward trend was zinc which gained 0.2% to finish at 2,977/t.
In this issue:
Dacian Gold (DCN) | Joining the ranks of the mid-tiers| BUY
Market Cap $533m | Current Price $2.58 | Valuation $3.66
Dacian Gold (DCN) commenced gold production at the Mt Morgans Gold Mine in Western Australia on 29th March in line with the feasibility forecasts for a completion in the March Q CY18. Guidance has been updated with production in the June Q CY18 of 30-40koz and FY19 production of 180-210koz. Exploration continues aggressively at Beresford and Cameron Well with updated Resource and Reserves expected in the 1HFY19. DCN trades on undemanding EV/Production metrics of $3,000/oz vs the peer group averaging $6,000/oz. We now expect that DCN’s discount to our NAV and its peer group valuation will unwind as the production commissioning is completed. BUY, TP $3.66ps
West African Resources (WAF) | Sanbrado updated Feasibility | BUY
Market Cap $234m | Current Price $0.34 | Target Price $0.52
West African Resources (WAF) has released the optimised Feasibility Study for the Sanbrado Project in West Africa. The study has built on the 2017 open pit Feasibility Study and now includes a substantial underground component following the discovery of the high grade M1 South Lode. The study assumes capital costs of US$185m with average annual production of 211koz over the first 5 years and all-in sustaining costs (AISC) of A$853/oz over the Life of Mine (LOM). The project is robust on a number of gold price sensitivities with an NPV5% (vs Argonaut NPV9%) of $540m at US$1,300/oz gold prices (100% basis, vs Argonaut NPV $355m at 80%), an after-tax IRR of 49%, a projected payback of 16 months and an initial 11-year mine life. The company is advancing towards a number of milestones in the coming months including the Formal Investment Decision (FID), commencement of early works and project financing. BUY recommendation maintained with a revised target price of $0.52ps (prior $0.66ps).
Recent Contacts & Presentations
Northern Star Resources (NST), 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 (SEH)
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