Market Update & Important Indicators
Stocks remained higher Wednesday after the Federal Reserve's latest policy statement flagged a nagging concern about low inflation, which could give officials a reason to delay raising rates. The Fed decided to leave its benchmark interest rate near zero, as expected, and the policy statement didn't send a clear signal about the timing of the first increase in rates. The Dow and S&P both rose 0.7% to 17,751 and 2,109 respectively.
Australian stocks pushed to catch up with gains in global equity markets on Wednesday as stability appeared to return to hard-hit Chinese shares, encouraging a recovery in commodity prices. The big banks–which account for a large share of the ASX 200–were all higher as a number of analysts estimated their moves to increase interest rates on some home loans to cool property speculation would boost earnings and help mitigate the industry regulator's call for lenders to hold additional capital. The ASX 200 gained 0.7% to 5,624.
European stocks also rose Wednesday, cheered by a further stabilization in Chinese equity markets, but trading volumes were expected to remain thin and investors cautious ahead of a policy statement from the U.S. Federal Reserve later in the day. The STOXX 50 was up 0.6%.
China's shares ended higher Wednesday, with sharp gains in the last half-hour of trading, a day after officials stepped up efforts to calm markets. The Shanghai Comp was up 3.4% to 3,789 and Hong Kongs rose 0.5% to 24,619.
Metals on the LME were mixed with copper rising 0.6% to US$2.41/lb and nickel falling 0.6% to US$5.08/lb. Gold was up 0.1% to US$1097/oz while Brent gained 0.2% to US$53.38/bbl. The AUD/USD is trading at 0.729.
In This Issue
Dacian Gold (DCN) | SPEC BUY
Dacian Gold (DCN) updated its Resource (excluding heap leach material) at Jupiter to 1.0Moz @ 1.3g/t (was 698koz @ 1.5g/t), incorporating a re-interpretation of the Doublejay Resource and additional drilling results from Heffernans (see below). Total project inventory (excluding heap leach material) increases to 2.4Moz @ 2.2g/t (see breakdown in Table 1, Page 2). The Mt Morgans project is moving rapidly towards the 3Moz mark, with a Resource update expected at the Westralia deposit. The project has the potential to become a >150koz producer, developed as a standalone or toll-treating operation. Given the sizable inventory and proximity to infrastructure, the asset is also likely to attract corporate attention with further development. DCN is one of Argonaut’s preferred gold development stocks given exposure to AUD denominated costs, exploration upside and proven management. Speculative Buy maintained.
Independence Group (IGO) | BUY
Independence Group (IGO) released June Q results with all three producing assets meeting upgraded FY15 guidance (previously announced). Tropicana (30% IGO, 70% Anglo Gold) produced 116.6koz gold at A$817/oz AISC, Long produced 2.3koz Ni at $4.50/lb, while Jaguar produced 10.2kt Zn and 1.4kt Cu at $0.59/lb (per lb Zn). The acquisition of Sirius Resources (SIR) is progressing with shareholders scheduled to approve the scheme in early September. Cash and bullion at June 30 totalled $122m (from $110m, minimal debt) and the unaudited FY15 NPAT was $77m.
Sandfire Resources (SFR) | BUY
Sandfire Resources (SFR) released June Q results and provided FY16 guidance. The Company is kicking goals on both the production and exploration fronts, with operations above nameplate and the significant Monty VMS discovery. Cu production was up 9% Q-on-Q to 18.6kt, while gold was down 6% primarily due to lower recoveries. C1 costs for the Q were US$0.98/lb. Despite the lack of sulphides in the last reported hole at Monty, Argonaut believes further drilling will continue to delineate significant mineralisation.
Recent Contacts & Presentations
Resolute (RSG), Rift Valley (RVY), Pacifico (PMY), Kingsgate (KCN), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), UIL Energy (UIL), Tlou Energy (TOU), FAR Limited (FAR), Cooper Energy (COE), Central Petroleum (CTP), Senex Energy (SXY)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
