Morning Notes

16/05/2017 Argonaut Morning Note

Market Update & Important Indicators:

U.S. stocks rose Monday as a jump in commodities prices boosted shares of energy and mining companies. U.S. crude oil rose 2.1% to $48.85 a barrel after top energy officials in Saudi Arabia and Russia said they would back a nine-month extension to a production-cut deal led by the Organization of the Petroleum Exporting Countries. Saudi Arabia's Energy Minister Khalid al-Falih and Russian Energy Minister Alexander Novak said the pacts could continue until the end of March 2018. Energy stocks in the S&P 500 climbed 1%. Shares of mining companies also advanced on gains in base metals prices after Chinese President Xi Jinping pledged more than $100 billion in new financing as part of a mega-infrastructure project. The U.S. gold price also rose for the day, jumping 0.2% to 1,230.40 US$/oz.

European equity-index gauges finished with modest gains Monday, scoring a fillip from commodity shares as oil and metals prices rose. The Stoxx Europe 600 index ended up 0.1% at 395.97, marking a second straight advance and keeping the index around its highest since August 2015. But the index moved between small gains and losses throughout the session. The oil-and-gas, basic-materials and financial sectors fared the best, but health-care, consumer-related and telecom shares struggled. The Stoxx Europe 600 Oil & Gas Index climbed 0.9%. It was bolstered by intraday gains of 3% for Brent and U.S. crude prices after Saudi Arabian and Russian energy ministers said they back a nine-month extension to a production cut deal led by the Organization of the Petroleum Exporting Countries-proposing a longer extension than expected. Mining stocks rose as well, leaving the Stoxx Europe 600 Basic Resources Index up 1.7%, the biggest rise since May 5.

After a soft beginning for early-starting Asian stock markets, the region saw more gains Monday while shaking off the weekend's North Korean missile test and a global cybersecurity attack. That includes the S&P/ASX 200, which squeaked out a slight gain thanks to a midday bounce in oil prices on prospects of OPEC-led production cuts being extended into 2018. Meanwhile, benchmarks in Hong Kong and Taiwan closed at fresh multiyear highs amid modest gains in China. But the Nikkei eased 0.1% to 19869.85 as the Japanese index continues to regroup after its failed first test of 20000.

Australian shares edged higher Monday, buoyed by the biggest banks as they recovered some of last week's heavy selling after the federal government proposed a new levy on their liabilities. After a choppy session, the S&P/ASX 200 ticked up 1.5 points to 5838.4. Gains by financial stocks and a rise in energy companies with a jump in oil prices helped lift an otherwise mixed performance across the market. Bank stocks were slugged last week after the federal government introduced a levy to raise money to plug its budget deficit. The impost, which will target the five largest banks, continues to be criticized by lenders who warn it will lift lending costs, drag on shareholder payouts and dull their international competitiveness.

The London Metal Exchange's three-month copper contract closed up 0.96% at $5,613/t. The other base metals finished mostly higher on Monday. Aluminium prices rose 0.9% to 1,902/t, tin prices rose 0.4% at 20,045/t, lead prices rose 0.3% to 2,126/t, whilst zinc prices rose 0.4% to 2,561/t. Nickel prices bucked the trend, falling 1.1% at 9,177/t.

In this Issue:

Dacian Gold (DCN) | Infilling reserves and value | Buy
Market Cap $342m | Current Price $1.69

Dacian Gold (DCN) has reported high grade results from an infill drill program at its Mount Morgans Project in Western Australia. The program focused on the upper levels at the Beresford underground mine and aimed at refining the mine plan, firming up the geological model and infilling and extending known mineralisation in preparation for first production. The results of the drill program have shown that i) high grades shoots occur outside the current Ore Reserve in close proximity to existing development and ii) mineralisation is broader than initially modelled in some areas such that bulk mining methods may be employed. DCN will now move to update its mine plan at Beresford and complete an 18-hole program at Allanson with a similar infill program ahead of mine development. Maintain BUY and target price of $3.00ps.

Recent Contacts & Presentations:

Ironbark Zinc Ltd (IBG), Sovereign Metals Ltd (SVM), Pilbara Minerals Ltd (PLS), Laconia Resources Ltd (LCR), Hazer Group Ltd (HZR), Transerv Energy Ltd (TSV), Ausquest Ltd (AQD), Quintis Ltd (QIN), Paradigm Biopharma Ltd (PAR), Pharmaust Ltd (PAA), Strandline Resources Ltd (STA), PharmaNet Group (PNO), Emerald Resources NL (EMR), Echo Resources (EAR), Investigator Resources Ltd (IVR), Beadell Resources Ltd (BDR), Pantoro Ltd (PNR), Botanix Pharmaceuticals Ltd (BOT), Resolute Mining Ltd (RSG), Hotcopper Holdings Ltd (HOT), Prairie Mining Ltd (PDZ) Vital Metals Ltd (VML), Red River Resources Ltd (RVR), Saracen Mineral Holdings Ltd (SAR)

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