Latest Research

Sandfire Resources Limited (SFR) - June Q Results

Sandfire Resources Limited LogoSandfire Resources (SFR) reported June Q results with 17.9kt Cu and 9.5koz Au at US$0.80/lb C1 costs beating Argonaut’s forecast of 18.8kt Cu and 9.4koz au at US$1.08/lb. SFR finished FY18 with 64.9kt Cu and 39.3koz Au, within the revised guidance range of 63-66kt Cu and 38-40koz Au. Monty decline development slowed during the Q and has fallen behind schedule as a result of poor ground conditions requiring addition ground support. SFR’s cash balance increased by $55m QoQ to $243m at 30 June. Interestingly, the Company stated that it is considering a rights issue to fund permitting and a BFS on the Black Butte Project in Montana. We expect this raise will be within Sandfire Resources America Inc (formerly Tintina Resources).

read more...

Fortescue Metals (FMG) - June Quarter Production

Fortescue Metals LogoFortescue Metals (FMG) reported June Q results with a record 46.5Mt shipped at US$12.17/wmt C1 vs March Q 44.7Mt @ US$13.14/wmt (-4% shipped Q-o-Q). Operations ran at an annualised rate of ~200Mtpa during the Q. Gross debt decreased to US$4.0bn (from US$4.2bn in March Q), and cash was higher at US$863m (from US$0.6bn in March Q). Price realisation gap to the Platts 62 CFR index narrowed to 37% (down from 38% in Q3FY18 and 34% in Q2FY18). Strip ratios were unchanged at 1.5:1. HOLD recommendation maintained and we revise our target price to $4.75ps (prior $4.88ps).

read more...

St George Mining (SGQ) - Building An Inventory

St George Mining LogoSt George Mining (SGQ) is steadily increasing the footprint of high grade base metal (Ni, Cu, Co, PGE) mineralisation in the Cathedrals Belt of Western Australia since taking control of the project in early 2016. Argonaut is highly encouraged by the latest drill hole MAD108 at the Investigators Prospect which intercepted 7.6m of sulphide mineralisation, including 1.3m of massive sulphides, down dip of previous holes MAD38 and MAD60 extending the mineralisation ~320m down-plunge. Hand-held XRF reading for the massive component measured 8% Ni and 7% Cu. Exploration along the 4.5km mineralised strike of the Cathedrals Belt is ongoing and we predict the company will be in a position to release a Maiden Resource in late-2018 or early-2019. SGQ is a standout Ni/Cu explorer based on exceptional grades (up to 8% Ni equivalent) and open pittable fresh rock mineralisation.

read more...

Western Areas (WSA) - Funded For Growth

Western Areas LogoWestern Areas (WSA) released June Q results with 6.4kt Ni in concentrate at C1 costs of A$2.80/lb (before payability), beating Argonaut’s forecast of 4.9kt Ni at A$2.55/lb. The strong finish to the year resulted in WSA meeting revised guidance of ~21kt, with FY18 actual of 21.1kt at A$2.63/lb. The Company generated strong cash flow during the Q adding $16m cash to finish the year at $152m. We believe WSA is in a strong position from cash and future cash flow to self-fund growth projects, including the Odysseus underground mine with pre-development capex of $190-200m (PFS estimate). Upgrade to BUY with a $3.40 target price

read more...

Evolution Mining (EVN) - Strong Finish But Capex Headwinds Await

Evolution Mining LogoEvolution Mining (EVN) delivered March Q production of 202koz (+6% vs March Q 191koz) above Argonaut’s estimates of 193koz. All-in sustaining costs (AISC) of A$846/oz were 10% higher QoQ (A$768/oz in March Q). Standout performance came from the Ernest Henry (EH) asset with 24koz at a record low AISC of negative -$823/oz (including by-product credits) and generating net mine cash-flow of A$59.4m for the Q. Group operating mine cash-flow of $221m (+26% vs Mar Q $175m) and net mine cash flow of $136m (+22% vs March Q $111.4m) were higher than Argonauts forecasts as a combination of record-low costs at EH and improved production. FY18 production of 801koz came in at the upper end of 790-805koz guidance (vs Argonaut 794koz), however operating mine cash flow came in at $812m, well above our forecast as a result of significantly lower AISC which saw the full year come in at A$797/oz, -6% lower than Argonaut forecasts and well below the FY18 A$820-870/oz guidance. The stock remains in line with our valuation. HOLD recommendation maintained.

read more...