Latest Research

Gage Roads (GRB) - Turning On The Taps

Gage Roads LogoOne year into its 5-year strategy, GRB has comfortably delivered against expectations. The latest quarterly showed strong operating cash inflow and unaudited earnings ahead of our forecasts. Marketing efforts and growing brand awareness has shifted the sales mix towards proprietary products, boosting the FY17 GP margin to an impressive 58%. Sales growth through independent retailers and the on-premise market validates GRB’s “return to craft” strategy. Upgrades to earnings on the back of the latest results improves our blended valuation to $0.066 (prior $0.061). We maintain a positive view and buy call.

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Sandfire Resources (SFR) - Clock Is Ticking

Sandfire Resources LogoSandfire Resources (SFR) produced a solid final Q for FY17 with 17.1kt Cu and 9.7koz gold in concentrate (+5% and +8% QoQ) beating Argonaut’s forecast of 16.8kt Cu and 9.5koz gold. SFR finished FY17 with 67.1kt Cu and 38.6koz gold, within guidance of 65-68kt Cu and 35-40koz gold. Annual C1 costs of US$0.93/lb were below the guidance range of US$0.95-1.05/lb. The Company has broken ground on the Monty deposit (70% SFR: 30% Talisman Mining [TLM]) with the commencement of the underground boxcut. Argonaut maintains a HOLD recommendation with a $6.10 target price (previously $6.05).

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MZI Resources (MZI) - Production Improving, Debt Looming

MZI Resources LogoMZI Resources (MZI) released June Q production with a significant improvement in ore mined and processed (+13% and +14% respectively QoQ). The Company also achieved record sales 23.4kt of mineral sands products generating proceeds of $14.8m. Operations at the Keysbrook mine appear to be stabilising following the installation of the Mining Field Unit (MFU). Balance sheet risk remains our key concern with a US$21m debt repayment to Resource Capital Fund (RCF) due in the first week of December. MZI is currently exploring options to achieve a simpler and more efficient capital structure. Argonaut maintains a HOLD recommendation with a revised target price of $0.38/sh.

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Resolute Mining (RSG) - A Transitional Year Ahead

Resolute Mining LogoResolute Mining (RSG) delivered an in-line June Q, producing 71koz (-18% Q-o-Q) at an all-in sustaining cost (AISC) of A$1,502/oz (-45% Q-o-Q). The higher cost June Q was driven largely by Syama sulphide production coming largely from stockpiles at lower grades and recoveries than the March Q and lower milling of open pit sulphide ores from satellite deposits. Syama Q4 gold production declined by 32% to 47koz at an AISC of $1,558/oz. At Ravenswood, production improved to 24koz (+22% vs Q3) and costs fell to A$1,300/oz (-20% vs Q3) after higher proportions of Mt Wright saw head grades lift by 7% vs Q3. FY17 gold production finished the year with 330koz (vs Argonaut 309koz) at an AISC of A$1,130/oz (vs guidance of $1150/oz and Argonaut forecasts of A$1,028/oz). Underground ores continue to ramp up as mining pushes ahead with the Syama sub level cave development now feeding development ore into the production profile. After incorporating FY18 guidance into our model we revise our target price to $1.40ps (prior $1.53) and we maintain our BUY recommendation.

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Western Areas (WSA) - Magnificent Seven

Western Areas LogoWestern Areas (WSA) continued its impressive streak of stable production and low costs with June Q production of 6.0kt Ni in concentrate at C1 costs of $2.42/lb (before payability), broadly in line with Argonaut’s forecast of 6.1kt Ni at $2.45/lb. WSA finished FY17 with 26.0kt Ni at $2.38/lb, at the upper end of production guidance (25-26kt) and at the lower end of cost guidance ($2.35-2.50/lb). The Company strengthened its balance sheet to $140.3m cash (no debt), following the sale of its remaining interest in Bluejay mining Plc for $26.8m. BUY recommendation maintained with a $2.70/sh target price.

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