Latest Research

Saracen Minerals - Strong Quarter, FY'19 Capital Upscaled

Saracen Mineral Holdings (SAR) released December Q results with strong group production of 88.8koz at an all in sustaining cost (AISC) of A$1,067 (vs September Q : 88.9koz @ A$993/oz). Subsequent to a strong first half, SAR has increased FY19 guidance from 325-345koz to 345-365koz. SAR has also upscaled FY19 capital commitments with an additional $35m for mine development at Karari/Dervish and Thunderbox. At 31 December the Company had $142.6m in cash, bullion and liquid assets. Downgrade to SELL from HOLD with a revised $2.10 target price (from $1.85).

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Austal - Shipshape

Austal LogoWith all geographic regions contributing for Austal, we have long expected a solid performance in FY19. Recent share price moves reflect this positive outlook. In our view, consistent margins and earnings in the US, together with a growing level of group Support work (>$200m in FY18), helps underpin earnings. Meanwhile, investment in new designs and technology, and expanding capacity in Australasia, sets ASB up to take advantage of growing demand in the commercial ferry market. BUY maintained on a $2.30 blended valuation (prior $2.25).

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Paladin Energy - Uranium sales boost cash balance

Paladin Energy (PDN) released December quarter results with sales of 475,000lbs at US$31.41/lb, generating US$14.9m revenue. This was in-line with forecast sales from the previous quarter. The Company ended 2018 with US$44m cash, up from US$31m at 30 September. PDN’s Langer Heinrich and Kayelekera mines are on Care and Maintenance while uranium prices remain low. The Company has initiated a concept study on Langer Heinrich to investigate options to decrease costs, increase throughput and productivity and potentially recover vanadium as a by-product. Argonaut maintains a BUY recommendation with a $0.28 target price.

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CTI Logistics - Interims preview

CTI Logistics LogoCLX’s operations closely mirror the business cycle, and with a WA recovery taking time and growth risks elsewhere in the country, we build more conservatism into our forecasts. Positively, CLX exhibits greater geographic diversity, while consolidation and cost control in WA positions the Company to benefit from an eventual turnaround. Our blended valuation remains $1.35 and CLX continues to trade on undemanding multiples in our view. We remain positive on the longer term outlook, and retain our BUY call accordingly, although acknowledge the current macro environment is likely to extend the recovery period.

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Stanmore Coal - Strong December Quarter

Stanmore Coal LogoStanmore Coal (SMR) produced a stellar December Q with ROM coal production of 799kt and total sales of 573kt, up 60% and 80% respectively. This result comes after a successful transition from Isaac Plains (IP) to Isaac Plains East (IPE) mining area. ROM coal production was at a 3.2Mtpa annualised run rate versus the nameplate throughput for the Coal Handling and Wash Plant (CHPP) of 3.5Mtpa. Cash decreased from $19.3m at the end of September to $9.6m. This follows a heavy build in working capital, which has since unwound leaving a current cash balance of ~$31.2m (no debt). Golden Investments issued a third and final takeover offer, which is now unconditional, with an unchanged all-cash price of $0.95/sh. Given the independent expert’s valuation of $1.48-1.90/sh, we do not believe the bid will be successful. BUY recommendation with a revised $1.75 target price.

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