Latest Research

Saracen Mineral Holdings (SAR) - Funded For Growth

Saracen Mineral HoldingsSaracen (SAR) reported March Q results with group gold production of 79.7koz at an all-in sustaining cost (AISC) of $1,181/oz versus Argonaut’s forecast of 78koz at $980/oz. The Company’s cash and bullion increased $16.2m Q-on-Q to $91.5m with both Carosue Dam and Thunderbox generating strong free cash flow. Looking forward, SAR is focussed on defining a 7-year production outlook growing to 350-400kozpa. Organic growth through exploration is the key driver for this target and we believe higher production rates will be largely driven by successful Reserve expansion and an uplift in the average milled head grade.

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OZ Minerals (OZL) - March Q Results

OZ Minerals LogoOZ Minerals (OZL) released March Q results with 27.5kt copper and 30.8koz gold in concentrate at an all-in sustaining cost (AISC) of US$1.36/lb versus Argonaut’s forecast of 23.0kt and 33.0koz at US$1.30/lb. Open pit operations at Prominent Hill are now complete and mining will now transition to 100% underground ore with the mill being topped up with stockpile feed. Carrapateena development remains on track with $65m spent during the Q, leaving $~743m to completion. In March, OZL announced the acquisition of Avanco Resources (AVB) for ~$418m comprising 50:50 cash and scrip. Argonaut values AVB at $400m making the acquisition roughly value neutral, however we acknowledge the high strategic value as OZL gains a foothold in the proven IOCG district of Carajás, in Brazil.

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Metro Mining (MMI) - First Shipment Amidst Strong Bauxite Macro

Metro Mining LogoMetro Mining (MMI) is on the cusp of its first shipment from the Bauxite Hills Project in Northern Queensland. Product is currently being stockpiled with barging and ship loading to commence from the 18th April. MMI’s first sales are fortuitously timed amidst positive macro factors, such as US Sanctions on Russian global major Rusal and Chinese refinery restarts, which are pushing up alumina and aluminium prices. MMI will ship at an initial 2Mtpa rate then ramp up to 6Mtpa over four years, making it the largest Australian bauxite exporter after RIO.

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Myanmar Metals (MYL) Awakening A Giant - Initiating

Myanmar Metals LogoMyanmar Metals (MYL) holds an option to acquire a majority stake in the Bawdwin Mine in Myanmar, which we regard as the best under-exploited polymetallic asset globally. Large scale mining at Bawdwin ceased during WWII leaving intact a high-grade core resource of 41.4Mt at 5.7oz/t silver, 11% zinc & lead and 0.33% copper. MYL is scheduled to exercise its option on Bawdwin in May and gain a 51% majority stake and operatorship of the mining concession which incorporates the resource, a 38km2 land holding, hydro power, and access to strategic transport routes and water. SPEC BUY recommendation.

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OZ Minerals (OZL) - Avanco Takeover - A Regional Play In Carajas

OZ Minerals LogoOZ Minerals (OZL) has made an off-market takeover offer for Avanco Resources (AVB, not covered) comprising 8.5¢/sh cash and 0.009 OZL shares for every AVB share (50:50 cash/scrip). This values AVB at 17¢/sh or $418m which is a 119% premium to the company’s 1-month VWAP. While this represents a significant premium to the last price of 7.7¢/sh, OZL is buying a large portfolio of complementary copper/gold assets and will attain a foothold in a proven IOCG district of Carajás in northern Brazil. Our modelling indicates that OZL can fund the acquisition from existing cash whilst still funding the remaining $808m for the Carrapateena project and maintaining dividends. BUY recommendation.

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