Latest Research

Argonaut Small and Micro Cap and Speculative Stock Preview

We preview the interim results for small cap stocks under coverage, highlighting a mix of growth and value. Stocks discussed include ASB, GCS, PGC, PPC, TFC and TOX. We are also expecting considerable newsflow from the micro and spec stocks we have under coverage, and comment on CLX, GRB, OBJ, OEC, OCC, TPS and VLT. This follows our mining services (ASL, GNG, MCE and PEA) interims preview released last week.

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Orthocell (OCC) - Collaboration with J & J

OCC has signed a research collaboration agreement with DePuy Synthes Products, Inc., part of the Johnson & Johnson Family of Companies. A collaborative study for OCC’s Ortho-ATI® stem cell approach for the regeneration of degenerate tendons and ligaments will commence in the first quarter of 2017. The trial will be led by Orthopaedic surgeon, Professor Allan Wang from the University of Western Australia and current president of the ‘Shoulder and Elbow Society of Australia’.

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Saracen Mineral Holdings (SAR) - On Track for 300koz p.a. in FY17

Saracen Mineral Holdings LogoSaracen Mineral Holdings (SAR) release a preview for the December Q with group gold production of 66.2koz, up 8% Q-on-Q and broadly in line with Argonaut’s forecast of 65koz. Carosue Dam produced 37.7 and Thunderbox produced 28.5koz, up 10% and 4% respectively. With annualised production of 265kozpa, SAR is on track to exit FY17 at its target 300kozpa run rate. Argonaut maintains a HOLD recommendation with a $1.12 target price.

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Paladin Energy (PDN) - Restructure: A Chance for Survival

Paladin Energy LogoPaladin Energy (PDN) has announced a proposed balance sheet and capital restructure which entails new longer dated convertible bonds (CBs), secured bonds, converting debt to equity, raising new equity and a share consolidation. This restructure is in response to a decreased likelihood that PDN will complete the previously announced 24% sale of the Langer Heinrich mine (LHM) to CNNC for ~US$175m. Proceeds of this transaction were flagged to repay the US$212m CBs due April 2017. The restructure is highly conditional and requires support from existing bondholders, shareholders and Électricité de France (EdF), with whom PDN has a secured offtake arrangement. If successful, the restructure will be highly dilutive to existing shareholders, but positive, as the debt commitments will be pushed out and the Company will retain 75% of LHM. Argonaut assumes the successful restructure of the balance sheet and derives a pro-forma valuation of $0.08/sh (previously $0.20). We estimate pro-forma 7.7b shares on issue, before an anticipated 10 for 1 share consolidation. Argonaut downgrades PDN to a HOLD from SPEC BUY as the stock is trading in line with our revised valuation.

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Argonaut Mining Services Interims Preview - Where to Now?

We had Hold calls on all our covered resource-exposed industrials by end August 2016. This followed the earnings reporting season and a period of strong share price gains. Since then all except GNG have been upgraded to Buy, largely on the back of share price pull-backs. Valuation and recommendation discipline is needed in a volatile sector where share price growth and earnings growth often diverge.

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