Argonaut has revised its commodity prices with changes to base metals, gold, uranium, iron ore, bauxite, Brent oil and spodumene concentrate. We have also adjusted our CNY/USD FX rate and lowered the discount rate applied to Australian domiciled copper producers. Macro factors such as ongoing trade tensions between the US and China, stagnating global growth and escalating Chinese debt/bond defaults pose significant risk to commodity prices and are driving high price volatility. However, China, the largest single consumer of mineral commodities, continues to pull levers to stimulate growth. Most recently this has incorporated fiscal expansion & monetary easing, tax cuts and power cost reductions for manufacturers. Improving supply demand thematics and growing demand for electrification and battery minerals should provide positive price movements for copper and nickel in the short to medium term. We take a view that the proliferation of electric vehicles will continue to drive battery mineral demand deep into the next decade, however some sectors are moving into market balance or surplus such as lithium and cobalt. Gold as a defensive investment remains a key theme with the ongoing US-China trade dispute. Argonaut’s preferred metals over the medium-term include gold, copper and nickel. Our preferred stocks include; Dacian Gold (DCN), OZ Minerals (OZL), Otto Energy (OEL), Gold Road (GOR), Myanmar Metals (MYL) and Yanzhou Coal (1171:HK). Changes to commodity prices, FX and stock recommendation are detailed in the attached document in Tables 1-3.
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