Argonaut | The Natural Choice in Resources

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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