Overseas Market Report – European Markets Rise; U.S. Market Closed For Holiday
U.S. markets were closed Monday in commemoration of Presidents Day but U.S. stock futures advanced sharply, mirroring solid gains in Asia where weak economic data spurred hopes that central banks will launch more easing measures.
Investors were also speculating whether a bottom has been reached after the recent selloff, with some analysts arguing the market is oversold in the short term.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 1.75% and the 5-year yield was 1.21%.
European markets continued to rise on Monday, on the back of gains in telecoms and a strong showing from banks, after news that the European Central Bank may buy Italian bad loans.
The FTSE 100, French CAC 40 and Germany's DAX were up 2.0%, 3.0% and 2.7%, respectively.
In Asia, Japanese shares rallied with the Nikkei 225 up 7.2%.
The Hang Seng rose 3.3% on the day while the Shanghai Composite shed 0.6%. India's Sensex rose 2.5%.
Australian Market Report – Local Market Expected To Open Higher
Ahead of the local open, SPI futures were 27 points higher at 4,812.
Monday 15 February – close. The Australian market had a solid start to the week as positive outcomes from overseas markets last Friday sparked a local rally this morning. Local stocks hovered well above the flat line throughout the day, with the resource stocks and the big lenders leading the charge. Most sectors ended higher, with only telecommunication services posting losses. The Australian dollar appreciated against most major currencies.
The All Ordinaries gained 76.80 points to 4,893.40 while the S&P/ASX 200 rose 78.20 points to 4,843.50.
In This Issue
Argonaut Research| Paringa Resources (PNL) | SPEC BUY
Paringa Resources (PNL) released a positive Scoping Study for the No.2 Mine at the Buck Creek thermal coal complex in Kentucky, US. The No.2 Mine will now be developed ahead of the No.1 Mine as a consequence of significantly lower capex (US$44m vs US$105m) and a shorter development timeline (12 months construction vs ~19 months). The US$220m coal sales agreement with Louisville Gas and Electric Company and Kentucky Utilities Company (LG&E and KU) should be amended to cater for supply from the No.2 Mine, resulting in 55% of the slated 1.8Mtpa (short tons) production being assigned to contracted sales (was 26% from the 3.8Mtpa No.1 Mine). Argonaut believes this change in development strategy will facilitate easier financing of the project. SPEC BUY recommendation maintained with a revised target price of $0.98 (from $0.85)
Argonaut Research| Berkeley Energia (BKY) | BUY
Argonaut reinitiates coverage of Berkeley Energia (ASX:BKY, LON:BKY) with a BUY recommendation and $2.10 target price. Our recent Salamanca (Spain) site visit confirms it is one of the few uranium development projects globally with near term production potential and the capability to generate strong margins at current U3O8 prices. Salamanca benefits from excellent infrastructure and exceptional leach kinetics which drives low operating and capital costs. The Company aims to commence construction in H2 CY16 with first production expected late-2017 (Argonaut assumption early-2018). BKY is well positioned to take advantage of growing uranium demand with a significant production profile and high margins which enhances investment appeal.)
Newcrest Mining (NCM)
Newcrest Mining updated its Mineral Resource and Ore Reserve estimates for the 12 month period ending 31 December 2015 and for this purpose, has completed a detailed review of all production sources. The review has taken into account updated long term metal prices, foreign exchange and cost assumptions and mining and metallurgy performance to inform cut-off grades and physical mining parameters. This has resulted in the most marginal ounces being removed from the portfolio and these are reflected in changes to Mineral Resources and Ore Reserves. As at 31 December 2015, the Group Ore Reserves are estimated to contain 69Moz of gold, 11mt of copper and 46Moz of silver. As at 31 December 2015, the Group Mineral Resources are estimated to contain 140Moz of gold, 20mt of copper and 120Moz of silver. NCM fell 9 cents to $16.21.
Crown Resorts (CWN)
Crown Resorts announced on 15 February 2016 that the Company has received amended assessments from the Australian Taxation Office for a total of $250m, which comprises primary tax and interest. The amended assessments are in respect of income tax paid for the financial years ending 30 June 2009 to 30 June 2014 (inclusive). The amended assessments relate to the tax treatment of some of the financing for the Company's investment in Cannery Casino Resorts and other investments in North America. The Company considers that it has paid the correct amount of tax and intends to pursue all available avenues of objection to the amended assessments. CWN lifted 28 cents to $11.50.
Recent Contacts & Presentations
Troy Resources (TRY), Northern Star Resources (NST), Regis Resources (RRL), Medusa Mining (MML), Doray Minerals (DRM), Beadell Resources (BDR), Red 5 (RED), Kingsgate Consolidated (KCN), OBJ (OBJ), Sino Gas & Energy Holdings (SEH), TFS Corporation (TFC), Paragon Care (PGC), Austal (ASB), Orbital Corporation (OEC),Energia Minerals (EMX), Berkeley Energia (BKY) , Finders Resources (FND), 4DS Memory Ltd (4DS) , Bionomics Ltd (BNO)
