Latest Research

Western Areas (WSA) - FY18 Results & Busy Year in FY'19

Western Areas LogoWestern Areas (WSA) released FY18 financial results with revenue of $248m, EBITDA of $84m and underlying NPAT of $12m, versus Argonaut’s forecasts of $237m, $92m and $12.2m respectively. NPAT decreased $7.5m or 39% Y-on-Y, however underlying NPAT rose $23.4m after removing asset sales realised in FY17 (Bluejay Plc and Kidman Resource to the sum of $30.8m). Revenue, which increased 16% Y-on-Y, benefited from A$1.48/lb higher realised nickel prices, partly offset by an 11% decrease in sales volumes. WSA retains a strong balance sheet $152m cash and no debt.

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Saracen Minerals (SAR) - FY'18 Results

Saracen Mineral Holdings Logo Saracen Mineral Holdings (SAR) reported FY18 financials with strong results across the board. Revenue of $511m, EBITDA of $199m and NPAT of $76m were up 21%, 75% and 166% respectively. This was largely in-line with Argonaut’s forecasts listed in Table 1 below. Underlying NPAT was $76m after deferred exploration costs (-$1.4m), a profit on the King of the Hills asset (+$10.6m) and an impairment on asset sales ($-0.9m) SAR retains a strong balance sheet with $118m cash and liquid assets and $150m undrawn debt. Higher production, lower operating costs and only a marginal drop in the realised gold price led to margin expansion with free cashflow increasing from $8m in FY17 to $66m in FY18.

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GR Engineering (GNG) - FY'18 Results

GR Engineering Logo Revenue of $284m and underlying EBITDA of $24.1m were in line with our expectations. Timing of contracts and an increase in working capital negatively impacted cash flow in 2H18, although we expect this to improve through FY19. It will be influenced by the timing of two key projects (Thunderbird and Karlawinda), as will our FY19 revenue forecast (expected to be 2H weighted). Our $1.55 valuation (prior $1.60) is based on a longer-term view, a solid track record, and an expectation cash will climb from here.

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Myanmar Metals (MYL) - Great Expectations from Exploration

Myanmar Metals Logo Myanmar Metals (MYL) released an accelerated mine development plan for its Bawdwin Project in Myanmar (51% MYL, 49% local owners) outlining a 15,000m drill program and setting a timeline to complete feasibility studies, offtake and financing and requisite permitting. Drilling will focus on the Shan and Meingtha lodes to upgrade resources from Inferred to Indicated status. The Company also plans to test extensions to the known Bawdwin lodes, starting with electrical geophysics (IP and EM), magnetics and soil sampling. Argonaut believes this initial work will generate multiple highly prospective targets given the lack of modern exploration in the region. We highlight that historic workings and exposed metalliferous gossans span over an 8km strike (versus the current resource strike of 1.2km).

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Ausdrill (ASL) - Digging Deeper

Ausdrill LogoASL’s FY18 result (underlying EBITDA of $161.4m) was in line with expectations, but the main news was the proposed acquisition of Barminco and associated $250m capital raise. In our view it is compelling for a number of reasons, despite the recognition of significant intangibles and a number of one-offs. We assume the transaction proceeds and have EPS of 20.7c in FY20 (first full year impact).

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