Argonaut | The Natural Choice in Resources

Argonaut is a full service advisory, stockbroking & research and investment house with offices in Perth and Hong Kong. Argonaut is technically driven & focused on natural resource companies & businesses that service the metals, mining, energy and agri-business sectors. Argonaut has an established track record of creating significant wealth for clients.

Morning Notes

The Dow Jones Industrial Average edged higher to cap off its biggest week of gains since mid-July. Shares of aerospace manufacturer Boeing and 3M, a maker of industrial adhesives and Post-it Notes, were among the best-performing shares in the index of 30 stocks. The Dow has risen in eight of the past nine trading sessions, with the most recent gains putting the blue-chip index up 2.2% for the week, its best weekly stretch since July 13. The slate of tariffs on $200 billion of Chinese goods President Trump recently announced are set to kick in Monday, first at 10% and then rising to 25% at the end of the year. The Dow Jones Industrial Average rose or 0.3%, while the S&P 500 was little changed. The Nasdaq Composite slipped 0.5% as technology stocks weakened later in the session. While the Dow and the S&P remain on pace to notch weekly gains, the NASDAQ ended the week down 0.3%.

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Latest Research

Stanmore’s FY18 underlying EBITDA rose more than 70% yoy to A$45.5m, vs Argonaut’s forecast of AS$48m, driven by 14% yoy increase in underlying margin. The Company announced a final dividend of 2c/sh, which we regard as a sign of balance sheet strength ($20m cash and no debt) and confidence to fund growth projects from expanding free cashflow. SMR’s FY19 ROM production is expected to increase >50% with the commissioning of the Isaac Plains East mine (IPE). This mine will have lower strip ratios, higher yields and a higher ratio of coking to thermal coal, resulting in lower FOB costs (A$100/t) and higher realised prices. SMR has growth options including the recently acquired Wotonga South (Isaac Downs) project immediately south of Isaac Plains and the Isaac Plains Underground (IPUG). A BFS on the underground is due for completion in the second half of CY18. The stock is currently trading at a very attractive EV/EBITDA of 2.1x, based on FY19 earnings. We reiterate our BUY recommendation on Stanmore and upgrade our target price to A$1.40 (prior A$1.10).

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Latest News

Argonaut Congratulates Dacian Gold on a Highly Successful Capital Raising
Argonaut acted as Joint Lead Manager to successfully raise A$40 million for Dacian Gold Limited (ASX:DCN) (“Dacian” or “the Company”). The Company raised funds from Australian and international institutional and professional investors by way of a placement at an issue price of A$2.70 per share. The placement was heavily oversubscribed with significant demand generated from new major domestic and international institutional investors.

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