Latest Research

Dacian Gold (DCN) - Joining The Ranks Of The Mid-Tier

Dacian Gold LogoDacian Gold (DCN) commenced gold production at the Mt Morgans Gold Mine in Western Australia on 29th March in line with the feasibility forecasts for a completion in the March Q CY18. Guidance has been updated with production in the June Q CY18 of 30-40koz and FY19 production of 180-210koz. Exploration continues aggressively at Beresford and Cameron Well with updated Resource and Reserves expected in the 1HFY19. DCN trades on undemanding EV/Production metrics of $3,000/oz vs the peer group averaging $6,000/oz. We now expect that DCN’s discount to our NAV and its peer group valuation will unwind as the production commissioning is completed. BUY, TP $3.66ps

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Decmil (DCG) - Update And Contract Win

Decmil LogoDCG has pared back FY18 guidance, confirmed FY19 revenue expectations, announced a NZ$125m contract extension in New Zealand, and provided a general update across its businesses. While our FY18 numbers have been pulled back, we remain upbeat on DCG’s medium-term prospects across east coast infrastructure and WA resource projects, as well as the increasing exposure to New Zealand. We have reduced longer term margins slightly and our blended valuation is now $1.35 (prior $1.40). Our positive macro view and the valuation upside continues to support a BUY recommendation.

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Gage Roads (GRB) - Acquisition Of Matsos

Gage Roads LogoThe “Return to Craft” strategy has been well executed. The Matsos acquisition accelerates this process by adding well-known brands to a stable of strongly growing Gage products. The purchase price, at ~7x incremental EBITDA is attractive, and although largely funded by up to $12m in new equity at $0.085, we see EPS accretion close to 30% in FY19. Our blended valuation climbs to $0.100 (prior $0.090), however with strong momentum we introduce a target price of $0.117 (blended valuation 1-year out). Although the price is up nearly 25% on the placement and SPP price, there is still upside. BUY maintained.

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Sandfire Resources (SFR) - Consolidating Monty

Sandfire Resources LogoSandfire Resources (SFR) has reached an in-principle agreement with Talisman Mining (TLM) to acquire TLM’s 30% interest in the Springfield Joint Venture (JV) for $72m cash and a 1% net smelter return (NSR) royalty. Springfield incorporates the Monty deposit which is currently under development and due to contribute ore to the DeGrussa processing plant from Q2 FY19. Argonaut believes the price paid for TLM’s 30% of the JV is fair relative to our valuation of $250-300m for the Monty Project. Argonaut upgrades SFR to HOLD from SELL.

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Ausdrill Limited (ASL) - Project Update

Ausdrill Limited LogoIn our view the extent of the market reaction to today’s projects update is unwarranted and we upgrade to BUY (prior HOLD). We have captured the financial impact based on the announced specifics, and additionally reduced our FY19 African growth expectations given the lack of pipeline conversion to date. The opportunities remain however and, with a revised blended valuation of $2.40 (prior $2.75), we see upside from here.

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