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30/04/2015 Argonaut Morning Note

    Home Stockbroking & Research Morning Notes 30/04/2015 Argonaut Morning Note
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    30/04/2015 Argonaut Morning Note

    By admin | Morning Notes | 0 comment | 29 April, 2015 | 0

    Market Update & Important Indicators

    U.S. stocks held onto their losses Wednesday after a statement from the Federal Reserve signalled that interest-rate increases are still possible in the coming months, though the timing remains uncertain. The S&P 500 fell 0.4% to 2107 and the Dow dropped 0.4% to 18,036.

    European stocks plummeted Wednesday, pressured by a sharp rally in the euro against the dollar after U.S. economic growth figures dramatically undershot expectations. Having already ended the previous session 1.5% lower on weak corporate earnings, the Stoxx Europe 600 declined 2.2% on the day after data showed that the U.S. economy slowed sharply at the start of the year, as businesses slashed investment, exports tumbled and consumers showed signs of caution.

    Recent rallies in Hong Kong and Shanghai cooled. The Hang Seng Index fell 0.2% to 28,400 while the Shanghai Composite Index was flat at 4,477, as investors continued to weigh China's slowing growth and how effective government plans can be to help.

    Metals on the LME were up with the exception of nickel which fell 0.1% to US$6.07/lb. Copper was up 0.5% to US$2.80/lb and zinc gained 0.7% to US$1.05/lb. Gold was down 0.4% overnight to US$1,205/oz, while Brent rose strongly, up 1.9% to US$65.84/bbl.

    In This Issue

    Resolute (RSG) | HOLD
    Resolute Mining (RSG) produced 91.8koz @ reported AISC of A$918/oz, beating Argonaut’s forecast 86koz @ A$1,057/oz. Production and cost profiles are expected to be maintained in the June Q, suggesting the Company should exceed guidance. Net debt position is little changed, with cash, bullion and investments at A$24m (31st December A$23m) and debt at A$125m (31st December A$122m). This is largely due to the building up of stockpiles, paying down creditors and other capex spending. With the deferral of the Stage 2 cut-back, cash flow generation is expected to be robust in the subsequent Qs. However, given RSG’s balance sheet, the Syama underground capex and debt repayment requirements remain onerous. Argonaut has made revisions to its FY15/16 production numbers, reflecting a higher stockpiled ore grade from Stage I pit. This results in a valuation increase to $0.36 (was $0.33). HOLD maintained.

    Saracen (SAR) | BUY
    Saracen’s (SAR) drilling results at Thunderbox highlighted the project’s growth potential. Best result included 46m @ 3.0g/t from 606m (estimated true width). The Company recently released the Feasibility Study on Stage I (open pit), confirming a robust project. The results today demonstrate growth potential beyond the open pit. There is significant upside to Argonaut’s modest valuation of A$10m on Thunderbox underground and satellite pits upon positive study results. SAR’s exploration program (FY15 A$20m budget, 7 rigs) is likely to deliver further upside in the near term with results from Karari and Red October. The stock remains a key pick in the gold space. BUY and $0.56 valuation maintained.

    Recent Contacts & Presentations

    Saracen (SAR), Gold Road (GOR), Dacian (DCN), MZI Resources (MZI), Mobile Embrace (MBE), Fertoz (FTZ), Atrum (ATU), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), Migme (MIG), Vmoto (VMT), Pioneer Credit (PNC), Minemakers (MAK), High Peak Royalties (HPR), Leaf Resources (LER), Austin Engineering (ANG), Ausdrill (ASL), Matrix (MCE), Austal (ASB), MMA Offshore (MRM), CTI Logistics (CLX), 99 Wuxian (NNW), Regis (RRL), Paladin (PDN), Sirius (SIR)
     

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