Vault Intelligence (VLT) - Interesting For Growth
- Created on Friday, 03 February 2017 08:38
We like the shift to a recurring revenue SaaS model. This is despite 2Q17 numbers which demonstrate the mismatch between client acquisition costs (which are immediate) and revenue (which takes time to ramp up). We remain positive on longer term growth potential, although have downgraded forecasts on the evidence of higher costs. Spec Buy maintained on a revised blended valuation of $0.047 (prior $0.055).
Fortescue Metals Group (FMG) - 2Qtr17 Update
- Created on Thursday, 02 February 2017 08:19
Fortescue Metals (FMG) reported December Q results with 42.2Mt shipped at US$12.54/wmt C1 vs Sept Q 43.8Mt @ US$13.55/wmt (-7% cost reduction, -4% shipped Q-o-Q). This was above Argonauts forecast of 41Mt. The Company repurchased a further US$1.0bn in debt, reducing net debt to US$4.0bn and net gearing to 30%. 1H production of 86Mt at an average C1 cost of US$13.05/wmt puts FMG in an enviable position to reach/beat the upper end of its stated guidance. We make revisions to our model to account for improved costs, reduced debt and higher short term iron ore prices. We upgrade our price target to $5.18ps ($3.81ps prior), and maintain our SELL recommendation due to share price appreciation.
Salt Lake Potash (SO4) - 2Qtr17 Activities Yield Valuable Data
- Created on Wednesday, 01 February 2017 09:17
During the December quarter SO4’s operational highlights included trench pump tests, an off-lake drilling programme, and process development testwork that produced the first SOP samples from Lake Wells brine. The Scoping Study released in the prior quarter highlighted attractive opex and capex estimates. With feasibility work ongoing at Lake Wells we expect considerable newsflow, and numbers to be tightened, over coming months.
Orthocell (OCC) - Quarterly Update
- Created on Wednesday, 01 February 2017 09:13
OCC has a strong cash position to progress its product pipeline. In the December quarter the Company achieved significant milestones and received high-level recognition for their innovative suite of products. The subsequent J&J collaboration announcement puts OCC on the international map in the orthopaedic space, whilst the granted patent in Europe further strengthens OCC’s IP.
Oz Minerals (OZL) - Piling on the Cash
- Created on Tuesday, 31 January 2017 08:28
OZ Minerals (OZL) finished CY17 strongly with 30kt copper and 32koz gold produced in the December Q at total cash costs of US$0.96/lb. This was a beat on Argonaut’s forecast of 28kt copper and 29koz gold at US$0.98/lb. Subsequently, The Company achieved full year guidance with 117kt copper and 118koz gold at C1 costs of US$0.74/lb (vs guidance of 115-120kt copper and 115-120koz gold at US$0.70-0.80/lb). OZL ended the year with $656m cash, up from $509m at the end of September. Prominent Hill is in a cash harvesting phase with declining waste stripping as the final levels of the open pit are mined. The Carrapateena project is on schedule with the Tjati Decline developed to 450m (of 4,700m) and the final Feasibility due early Q2 2017. Argonaut’s valuation increases to $8.25/sh (from $6.60) as we align our model with the Company’s extended Prominent Hill mine life, out to 2028. Despite this valuation increase, the stock is trading well above our revised target price so we downgrade to SELL (from HOLD).