Two stocks that slipped – Syrah Resources and Northern Star Resources

Syrah Resources Ltd

SYR Details
· Resignation of Managing Director: Syrah Resources Ltd (ASX: SYR) stock fell 22.8% on October 05, 2016 after the company announced the resignation of its Managing Director, Mr Tolga Kumova as part of a transition on strategic direction of the company, while Mr Kumova will remain involved as a consultant for opportunities in battery anode market. Investors were not happy with this move as Mr Kumova had made a significant contribution to the company and transformed the group to a fully-funded company in advanced construction of the Balama Project in Mozambique. Mr Kumova has also resigned as a Director of SYR. On the other hand, the fall can be considered for a buying opportunity given SYR’s core Balama project’s progress. Results of a comprehensive pilot plant test program undertaken in Brazil, using 100 tonnes of Balama graphite run of mine (ROM) material indicated an upgrade in total graphitic carbon (TGC) across all size fractions by the addition of a liberation circuit as a final process step at the Balama Project.

· Recommendation: Given the ongoing interest for the group’s Balama project, we maintain a “Buy” recommendation on the stock at the current price of – $3.35

Northern Star Resources Ltd

NST Details
· Sale of Plutonic gold mine: Northern Star Resources Ltd (ASX: NST) stock fell 10.02% on October 05, 2016 due to pressure on gold prices at the back of fears of interest rate hikes. NST’s completion arrangements for the sale of its Plutonic gold mine are on track while the net financial benefit in the project was said to be due to transfer to Billabong Gold Pty Ltd on October 01, 2016 while legal completion is set for October 07, 2016. Meanwhile, NST reported only 5% increase in the sales revenue to A$887.4m in FY16 against FY2015 but generated 65% growth in the net profit after tax to A$165.4m. In FY 17, NST expects the total gold production of 485,000-515,000oz at an AISC of A$1,000-A$1,050/oz (US$728-$765/oz).

· Recommendation: NST stock already generated over 61% returns in this year to date as on October 04, 2016, and we believe that the stock is “Expensive” at the current price of – $4/.04


FY16 Financial Performance (Source: Company Reports)

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