Latest Research

Gage Roads (GRB) - Momentum

Gage Roads LogoSummer has been good to GRB, with a solid March quarter following the strong lead into Christmas. Own brand growth across all channels (independent bottle shops, national retailers and on-premise) demonstrates growing awareness of Gage Roads’ products. The events-based marketing strategy is working well, boosting confidence in the “return to craft” strategy. Our blended valuation climbs to $0.090 (prior $0.080) and we maintain a BUY call (upgraded yesterday) based on the expectation of margin and earnings growth in coming years, and the attractiveness of the craft beer segment of the liquor market.

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Sandfire Resources NL (SFR) - Life Out To 2022

Sandfire Resources LogoSandfire Resources (SFR) released March Q results with 15.5kt copper and 10.9koz gold production at C1 costs of US$0.97/lb versus Argonaut’s forecast of 16.0kt and 8.5koz at US$0.95/lb. SFR’s cash balance continues to increase, up $24m to $188m at 31 March. The mine life at DeGrussa has been extended by ~6 month out to CY22 with the incorporation of orebody extremities. Each additional year’s production has a significant impact on Argonaut’s model, adding ~17% to our NAV10. We downgrade to SELL based on recent share price performance.

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Pacific Energy Limited (PEA) - A Broader Offering

Pacific Energy Limited LogoA 52MW EPC contract awarded to newly acquired Contract Power by Mineral Resources (ASX:MIN) demonstrates the expanded capabilities, broader relationships and additional sectors accessible to the combined PEA business. We believe PEA is strongly positioned to add to a portfolio of installed capacity that is now approaching 400MW, and are less concerned that recent awards have gone elsewhere during a highly competitive period. Visibility via a weighted average contract duration of >4 years and undemanding trading multiples underpins our BUY call on an unchanged $0.80 valuation.

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Northern Star Resources (NST) - The Calm Before The Production Storm

Northern Star Resources LogoNorthern Star (NST) delivered a lower March Q, producing 124koz at an all-in sustaining cost (AISC) of A 1,075/oz (-4% on production, +1% on costs vs the Dec Q). Underlying free cashflow from operations was $32m (-8% from $34.9m in Dec Q). Net cash and investments increased to $439.1 (+1% Q-o-Q). Group milled tonnes fell by 6%, largely as a result of the cessation of production at Paulsens which impacted group throughput. Despite the lower production, NST is achieving record throughput and mining rates throughout the portfolio, reflecting the investment in the 600kozpa growth strategy. June Q production is now forecast at 150koz (>20% QoQ) which would see FY18 production reach the middle of the refined 540-560koz guidance range. Maintain HOLD and TP of $6.12.

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Sandfire Resources (SFR) - Life Out To 2022

Sandfire Resources LogoSandfire Resources (SFR) released March Q results with 15.5kt copper and 10.9koz gold production at C1 costs of US$0.97/lb versus Argonaut’s forecast of 16.0kt and 8.5koz at US$0.95/lb. SFR’s cash balance continues to increase, up $24m to $188m at 31 March. The mine life at DeGrussa has been extended by ~6 month out to CY22 with the incorporation of orebody extremities. Each additional year’s production has a significant impact on Argonaut’s model, adding ~17% to our NAV10. We downgrade to SELL based on recent share price performance.

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