Latest Research

St George Mining (SGQ) - Best Nickel/Copper Intercept To Date

St George Mining logoSt George Mining (SGQ) released further results from the ongoing drilling program at the Mt Alexander Project (JV: SGQ 75%, Western Areas [WSA]:25%). This included the best intercept to date from the Cathedrals Prospect, measuring 9.3% Ni and 2% Cu. Positive results have been returned from other prospects within the project, including 22m of Ni/Cu sulphides from 32m at the Stricklands prospect, incorporating ~2m of massive sulphides grading >2% Ni and >1.7% Cu. While massive sulphide intervals drilled to date are generally thin, mineralisation is shallow (generally <120m depth) and high grade Ni is complemented with strong Cu, Co and PGEs credits resulting in high tenor Ni equivalent grades (6-11% Ni Eq.). We believe this could support economic development following the definition of a maiden resource. The Company is also set to commence drilling programs at its East Laverton Gold Project and the Windsor Nickel Prospect in the same region. We regard SGQ as a well-funded ($5.7m cash at 31 March) base metal and gold explorer which will generate strong newsflow through 2017.

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Paringa Resources (PNL) - Funded and Commencing Development

Paringa Resources logoParinga Resources (PNL) has successfully raised US$20m debt (A$27m) and $53m through an institutional placement (102m shares at $0.52/sh). The Company is now fully funded to commence development of the Poplar Grave mine at the Buck Creek thermal coal complex, Kentucky, USA. More recently, PNL has begun excising options to acquire surface property for the mine and river barge load out facility ahead of development. Construction is due to commence July 2017 with first coal production in mid-2018. BUY maintained.

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Orbital (OEC) - Price Falls Overdone

Orbital LogoShare price falls (down 47% YTD) are overdone in our view; an EV of $20m is undemanding for a Company with attractive technologies validated by global clients. We have a degree of confidence in UAV forecasts given a 3-year deal with Insitu worth at least US$33m and, despite considerable forecasting uncertainty for REMSAFE, we believe the technology is compelling (sales have been made to the iron ore majors in the Pilbara and Anglo in South Africa). It could be argued the UAV business alone underpins the current share price and accordingly we upgrade from a hold call to speculative buy.

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Gage Roads (GRB) - Driving brand recognition

Key to strategy execution is growing brand awareness and demand. The shift in the sales mix toward proprietary products in recent months (32% of sales YTD) provides evidence this is happening, as does the better than expected GP margin of 56% (up from 52% in the prior corresponding period). In 1H17 GRB generated 33 cents EBITDA for each litre sold (up 10c on 1H16), setting the Company on a course to reach its targeted $1 EBITDA per litre over the next 5 years. We maintain our valuation, positive view and buy call.

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Sandfire Resources (SFR) - Debt free in time for Monty

Sandfire Resources (SFR) released March Q results with 16.3kt Cu and 9.0koz Au at a C1 costs of US$0.94/lb, lower than Argonaut’s forecast of 17kt Cu and 9.5Koz at US$0.95/lb. Production was impacted by two planned maintenance events. SFR is on track to meet the mid ranges of Cu and Au guidance of 65-68Kt and 35-40koz respectively. Post Q, SFR released the Monty Feasibility Study highlighting three years mine life producing 70kt Cu and 21koz Au at similar cash costs to current operation at DeGrussa. Ore will be processed through the existing DeGrussa Plant. At 31 March, SFR had $90m cash and no debt.

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