Latest Research

Saracen Mineral Holdings (SAR) - Exploration Bang For Buck

Saracen Mineral Holdings LogoSaracen Mineral Holdings’(SAR) $60m investment into exploration in FY19 is paying off with significant intercepts at numerous deposits/prospects. The standout result was an intercept of 69m @ 4.1g/t at Karari, 400m below the current mining level. Drilling at Thunderbox A Zone, Deep South and Otto Bore also returned extensional results. Infill drilling at Whirling Dervish, including 30m @ 4.9g/t and 30M @ 3.3g/t confirmed continuity of mineralisation in the line-of-sight of decline development. While the ongoing exploration success points to tangible Reserve/Resource expansion, we believe SAR’s current share price already factors in a mine life well beyond current Reserves, particularly at Karari. However, given the momentum of the stock we upgrade to HOLD from SELL.

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Myanmar Metals (MYL) - Significant Resource Upgrade

Myanmar Metals LogoMyanmar Metals (MYL) released a resource upgrade for the Bawdwin polymetallic deposit in Myanmar (51% MYL). Total resources increased by 15% to 94.2Mt @ 3.4oz/t Ag, 6.3% Zn+Pb and 0.2% Cu. This update included a significant confidence upgrade to the high-grade core (45.0Mt @ 5.7oz/t Ag, 10.7% Zn+Pb and 0.3% Cu) with 40% now in the Indicated category. Importantly, newly discovered mineralisation in the Yegon Ridge and Meingtha Gap zones was not incorporated in this resource and add significant upside for future updates. A PFS on the Bawdwin deposit is due for completion in early April and will likely be accompanied by a Maiden Reserve. MYL recently strengthened its Board with the appointment of former Mineral Resources (MIN) CFO Bruce Goulds. We see Mr Gould’ as a valuable addition which should contribute an ethos of innovation which was key to MIN’s success. SPEC BUY recommendation maintained with a $0.20 target price.

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Carnarvon Petroleum (CVM) - Material Oil Upside Potential -

Carnarvon Petroleum LogoWe initiate research on Carnarvon Petroleum (CVN) with a Speculative Buy recommendation and a price target of $0.68. CVN has 20% of the play opening oil discovery, Dorado, as well as 100% of the Buffalo oil field that it is planning to redevelop. CVN with its partner Santos (STO) is going to drill 2 appraisal wells and 1 exploration well this year. We expect that the appraisal wells will lead to an upgrade in resources and expand the size of the Dorado discovery. The exploration well is going to test a promising target on trend with the Dorado field. CVN is also going to be drilling a well into the Buffalo field in preparation for the redevelopment of the field. This well will help validate CVNs thesis on the volumes of unswept and attic oil that can be produced.

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PT Merdeka Copper Gold, Tbk (MDKA.IDX) - December Q Production

Merdeka LogoMerdeka Copper Gold (IDX: MDKA) reported Dec Q production of 44koz Au at an AISC of US$702/oz at Tujuh Bukit (“TB”, -9% on production, +8% on costs QoQ). CY18 production was 168koz at an AISC of US$590/oz, at the upper end of production and lower end of cost guidance. At Wetar, production was 4kt Cu at an AISC of US$1.48/lb (-10% on production, -22% on costs QoQ) as a result of poor equipment availability and lower irrigation rates which is expected to be resolved during Q1CY19. The TB oxide 8Mtpa expansion project is largely complete with commissioning in Q1CY2019. Porphyry resource drilling continued with strong zones of mineralisation returned in the North Block of the Upper High-Grade zone (UHGZ). Overall, production was in-line with a number of initiatives in place to improve output in 1HCY19. MDKA trades on an undemanding EV/EBITDA of 8x, with the share price not reflective of the pipeline of assets in the development and exploration portfolio. BUY recommendation maintained and target price of IDR 6,473.

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CTI Logistics (CLX) - Hard Work In WA

CTI Logistics LogoGiven the business closely mirrors the business cycle, CLX’s expectation for 1H19 PBT of $4.1m (below the $4.5m generated in the prior corresponding period) reflects a WA economy still struggling to turn around. While we build more conservatism into our forecasts, we still maintain CLX is well positioned to benefit from a WA recovery in time. Our blended valuation falls to $1.25 (prior $1.35) and, despite the absence of obvious shorter-term catalysts, we maintain a BUY call on the longer term outlook.

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