Latest Research

Evolution Mining (EVN) - A Standout Year

Evolution Mining logoEvolution Mining (EVN) delivered June Q production of 218koz (Mar Q 202koz +8%) slightly above Argonaut’s estimate 215koz. All-in sustaining costs (AISC) of A$825/oz were 2% lower qoq (A$840/oz in Mar Q) as a result of improved costs at Cowal, Edna May and Cracow. Standout performance came from the Ernest Henry (EH) asset with June Q production of 24koz (+7% qoq) at an all-in sustaining cost of negative -$432/oz (-$447/oz in March Q). EVN repaid a further $125m in debt ($40m in March Q), with no further debt obligations required until October 2017 and remaining net debt of $399m. June Q net mine cashflow of $137.1m (+24% vs March Q 110.7m) was higher largely as a result of the strong performance of Ernest Henry which represented ~35% of the group net cashflow generation for the Q. Argonaut maintains a BUY Recommendation with a A$2.49ps target price (prior $2.57).

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Northern Star Resources (NST) - A Strong Finish And More In The Post

Northern Start Resources LogoNorthern Star (NST) delivered an outstanding June Q, producing 154koz at an all-in sustaining cost (AISC) of $938/oz (+22% production, -5% on costs vs the Mar Q). Group production was boosted by the stellar performance at the Jundee operations of 85koz at AISC of $754/oz, 66% higher than the March Q. Underlying free cashflow from operations was $60.7m (vs $59.8m in March Q) ending with net cash and investments of $447m. Group production came in at 514.7koz @ AISC $1,013/oz reaching the top end of its 485- 515koz FY17 guidance and the lower end of costs. FY18 guidance forecasts 525-575koz @ AISC of $1,000-$1,050/oz (vs Argonaut 566koz). Looking ahead we await NST’s corporate update in early August which Argonaut believes will paint the picture of growth beyond 600-700kozpa in coming years. NST remains our key pick in the gold space and we reiterate our BUY recommendation and we upgrade our target price to $5.25 (prior $4.89).

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Northern Minerals (NTU) - Breaking Ground At Browns Range

Northern Minerals LogoNorthern Minerals (NTU) has commenced earthworks at its 100% owned Browns Range heavy rare earth projects in Western Australia. The project is commencing at a pilot plant scale to test mining methodologies, ore variability, the process flowsheet and logistical / market dynamics. Capex of $39m is fully funded through a combination of equity, Research and Development (R&D) financing, debt, offtake pre-payments and deferred payment agreements. Browns Range is a highly strategic project given its unique Dysprosium (Dy) rich heavy rare earth oxide (HREO) mineral assemblage and low sovereign risk jurisdiction. Dy has 6-12%pa forecast demand growth out to 2025, largely driven by its application in high strength magnets used in electric vehicle (EVs) motors.

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Ausdrill Limited (ASL) - Momentum Into FY18

Ausdrill Limited LogoWe remain attracted to ASL’s business quality and earnings momentum, but feel share price gains of nearly 50% over the last 8 weeks largely captures these attributes. Current trading multiples point to the longer term potential, where we expect earnings >20cps given historic performance. In our view delivery against these expectations is required to drive further share price gains and we downgrade to hold (prior buy).

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CTI Logistics Limited (CLX) - Patience Will Be Rewarded

CTI Logistics Limited LogoWe believe we are currently witnessing the trough in CLX’s earnings. We have attempted to estimate reasonable mid-cycle WA revenue and earnings, and think CLX can generate group EBITDA of $21m+ in a more normal operating environment. An EV that is ~5x this number is undemanding, especially if we adjust for unused land at Hazelmere (we estimate worth ~$25m). Our buy call is based on significant value on a long term view.

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