Latest Research

Sandfire Resources (SFR) - Exploration Intensifying

Sandfire Resources LogoSandfire Resources (SFR) released March Q results with 16.1kt Cu and 9.1koz Au, beating Argonaut’s forecast of 15.5kt Cu and 9.0kt Au. C1 costs for the Q were US$1.01/lb. SFR released a Maiden Resource for the Monty deposit (70% SFR:30% TLM) this week with 1.05Mt at 9.4% copper and 1.6g/t gold for 99kt contained copper and 55koz contained gold. Following the drill out of Monty, the Company is intensifying exploration in the Doolgunna region. At 31 March cash and debt were $45m and $70m respectively (vs $51m cash, $75m debt at December 31).

read more...

Sandfire Resources (SFR) - Monty Looks Minable

Sandfire Resources LogoSandfire Resources (SFR) released a Maiden Resource for the Monty deposit with 1.05Mt at 9.4% copper and 1.6g/t gold for 99kt contained copper and 55koz contained gold. This result was below Argonaut’s estimate of 1.4Mt at 9.9% copper and 1.9g/t gold. SFR recently competed a 70% earn-in into tenements containing Monty with previous owner, Talisman Mining (TLM), who retains 30%. Studies are underway to incorporate Monty into the DeGrussa mine plan, with potential to bring the deposit into production in mid-2018. Exploration is also ongoing in the Doolgunna region with a focus on prospects proximal to the DeGrussa plant. Argonaut upgrades to a BUY recommendation with a revised target price of $6.00 (previously HOLD with a $5.65 target price).

read more...

Fortescue Metals (FMG) - Buddying Up With Vale

Fortescue Metals LogoFortescue Metals (FMG) announced March Q results with 42Mwmt shipped at C1 costs of US$15/wmt in line. Year to date shipping of 126Mwmt indicates the Company will meet or exceed guidance of 165Mwmt. The balance sheet continued to improve with net debt declining by US$200m to US$5.9b. During the Q, FMG signed a Memorandum of Understanding (MOU) with Vale S.A. for a strategic partnership on product blending. If formalised, the benefits to FMG will include higher payability and higher demand for product blends. Downgraded to SELL with a $2.50 target price (from HOLD at $2.10).

read more...

TFS Corporation (TFC) - Steadily Lowering Risk

TFS Corporation LogoStrong operational momentum and reducing risk appeals. The execution of the vertical integration strategy allows the Company to extract value along the supply chain, while the just-concluded $60.5m placement enables TFC to offer to buy up to 221ha of 3rd party owned plantations for up to $53m. If offers are successful, TFC will have greater control over harvests and supply and shareholder returns will be boosted. Our valuation increases to $3.05 (prior $2.85) and we maintain a buy call.

read more...

Perseus Mining (PRU) - The Journey To 500Koz PA

Perseus Mining LogoWest African gold producer Perseus Mining (PRU) recently reached an agreement with Amara Mining (AIM:AMA) for a recommended business combination via a UK scheme of arrangement. A successful acquisition will create a West African focused gold producer with long life assets, capable of growing to ~500koz pa. AMA’s assets are complementary to PRU’s existing portfolio and provide geographic diversification. Whilst funding requirements are acknowledged for both Sissingué and Yaoure, we note PRU’s existing cash balance of ~A$100m (at CY15 end), likelihood for reduced Yaoure capex (Argonaut E US$260m) based on a smaller mill and contract mining, potential for debt funding and possible ~A$60m warrant proceeds (A$0.44 exercise price). Timing wise, the development of the two projects are apart, such that Sissingué will likely be in production when Yaoure is under construction, thereby contributing CF to its capex requirements. Although the journey to 500koz could be arduous, an improving USD gold price coupled with enhanced scale should see PRU gaining broader market recognition. BUY maintained.

read more...