Latest Research

Independence Group (IGO) - Soft June Qtr

Independence Group LogoIndependence Group (IGO) previewed June Q and FY16 production. All three assets were below Argonaut’s June Q expectations with 28.7koz gold at Tropicana (IGO 30% attributable basis), 8.9kt zinc and 3.2kt copper at Jaguar and 2.0kt nickel at Long versus our forecasts of 32koz gold, 9.7kt zinc, 2.2kt copper and 2.3kt nickel. Tropicana and Jaguar both achieved production guidance, while Long just missed the lower end of the 8.5-9.0ktpa nickel in ore range. Copper output at Jaguar staged a strong comeback to beat guidance after head grades increased 132% Q-on-Q to 2.9%. Mining at Long was impacted by paste fill issues in April. Costs and net cash were not reported.

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GR Engineering (GNG) - Opportunity Knocks

GR Engineering LogoGNG has won a $36m EPC contract with Auctus Resources. It commences immediately, helping bridge a gap until a large opportunity pipeline is potentially converted in 2017. This work is yet to be won but in our view GNG is well positioned. The Company has been a standout performer in the EPC space in recent times and could surprise to the upside over the next couple of years. Buy call maintained.

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Sandfire Resources (SFR) - Strong June Qtr

Sandfire Resources LogoSandfire Resources (SFR) finished off FY16 strongly with 17.8kt copper and 11.2koz gold in concentrate, beating Argonaut’s forecast of 16.6kt copper and 8.7koz gold. Full year production of 68.2kt copper and 37.6koz gold was just above the upper end of guidance for copper (65.1-68.0kt) and within the range for gold (35.0-40.0koz). The Company is net cash positive for the first time since commencing production with $60m cash and $50m drawn debt. With underground development to the C5 orebody largely complete, free cashflow (FCF) is set to increase. Argonaut estimates >$800m FCF out to FY20. BUY recommendation maintained with a $6.05 target price.

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Paragon Care (PGC) - Acquires Midas Software Solutions

Paragon Care LogoPGC has announced the acquisition of Midas Software Solutions. MIDAS provides a world-first, cloud-based, customisable, interpretive reporting platform for a wide range of diagnostic medical examinations (for example ultrasound, CT and MRI). Clients pay per report or via a licensing model. It is already in use, generating revenue and under trial by others. Additional modules are scheduled for release over the next couple of years. The two founders of Midas have considerable experience and strong technical backgrounds. We like the business model and expect PGC to become a larger integrated supplier to the healthcare industry on the back of ongoing organic and acquisitive growth. Buy maintained.

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Metro Mining (MMI)

Metro Mining LogoSince our last note on Metro Mining (MMI), the Company has been busy and achieved key milestones through the development of its 100% owned Bauxite Hills DSO bauxite project in Cape York, Australia. MMI has secured Native Title and Land Access, delivered a Revised Positive Feasibility Study (PFS) with expanded production plan, attained a transhipment contract, submitted its Environmental Impact Statement (EIS), and via its now closed takeover offer, acquired a strategic 22% stake in its neighbour Gulf Alumina (public unlisted). Off-take agreements are continuing to progress well and a Definitive Feasibility Study (DFS) for a 4-5Mtpa production scenario is due for release shortly. MMI is targeting first bauxite production in Q3 2017. SPEC BUY maintained with a $0.22 target price.

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