Resolute Mining Limited

RSG Details

Update on Definitive Feasibility Study: Resolute Mining Limited’s (ASX: RSG) stock climbed up 4.598 per cent on July 04, 2018 while the group has recently announced an update on Definitive Feasibility Study (DFS). According to the release, the group has significantly reduced the Life of Mine (LOM) All-In Sustaining Cost (AISC) to US$746 per ounce (oz) from US$881/oz. This DFS update shows the result of an ongoing effort by the company to look fundamentally and seek improvement in all parts of its flagship project i.e., the Syama Gold Mine in Southern Mali. Following this, the Syama Underground Probable Reserve increased by 38% to 3.0 Million ounces (Moz) of gold and the mine life also extended by four years from 2028 to 2032. Moreover, automation of underground mining equipment and Syama power upgrade are the key drivers of cost savings. Further, the management stated that they are developing a new underground mine and are on track to commence sub-level caving in December 2018 and they have an aim to make Syama the best mine of its type in the world and to ensure to unlock the full potential of this outstanding orebody.


Syama Underground DFS Update Operating Metrics (Source: Company Reports)

On the other hand, Van Eck Associates Corporation and its associates, a substantial holder of the Group increased their holding from 9.97 per cent of the voting power to 11.01 per cent of the voting power. ROE and ROIC stood at 4.9% and 5.2% as on 31 December 2017. Meanwhile, the stock price has risen 9.66 per cent in the past six months as at July 03, 2018 and is trading towards to 52-week high level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $1.365, considering the DFS study update which represents the potentiality to ramp up its current planned mining rate of 2.4 million tonnes per annum to as much as 4.0 million tonnes per annum.
 

RSG Daily Chart (Source: Thomson Reuters)
 

Iluka Resources Limited

ILU Details

Positive Outlook: Iluka Resources Limited (ASX: ILU) has expertise in the exploration, project development, mining, processing and marketing of mineral sands. The company is a major global producer of zircon and high-grade titanium dioxide products. Recently, the company has presented its business prospects at the Bank of America Merrill Lynch Conference Miami and highlighted about FY18 activity and business outlook. According to the presentation, the company applies a capital allocation framework that prioritizes funds for investment where strict financial criteria and strategic rationale can be met. It focuses on delivering sustainable value to shareholders. Further, the company expects price rise in Zircon minerals due to tight supply conditions. Hence, we expect that this price rise will support the topline growth of the company in the upcoming period.


Zircon Price Trend (Source: Company Reports)

On the financial front, the current ratio stood at 3.48x in 1HFY18 while debt to equity ratio substantially decreased from 0.37x to 0.27x during the six months. Schroder Investment Management Australia Limited, a substantial holder of the Group changed its holding from 7.11 per cent of the voting power to 5.99 per cent of the voting power. Moreover, Paradice Investment Management Pty Ltd ceased to be the substantial holder of the Group since 14 May 2018. Meanwhile, the stock has risen 4.59 per cent in the past six months and trading towards 52-week high level. Hence, we maintain our “Hold” recommendation on the stock at the current market price of $11.180 (up  4.291% on July 04, 2018), considering positive sands industry outlook.
 

ILUDaily Chart (Source: Thomson Reuters)
 

St Barbara Limited

SBM Details

Partnership with Swift Networks and Telstra: St Barbara Limited’s (ASX: SBM) stock climbed up 3.688 per cent on July 04, 2018 while investors resorted to safe haven stocks amidst fear of trade war and slip in global economy. The company has recently announced about partnership with Swift Networks and Telstra to enhance digital entertainment and connectivity services under a three-year deal to set up St Barbara Limited’s network infrastructure. The objective to select Swift Networks and Telstra was to strengthen its blue-chip partnerships and deliver market-leading solutions to the resources sector in addition to other verticals.


Quarterly Production Trend (Source: Company Reports)
 
The Company has released a quarterly update for the period ended 31 March 2018. According to the release, the consolidated gold production recorded 85,885 oz in Q3FY18 from 99,509 oz in Q2FY18. The Total Recordable Injury Frequency Rate (TRIFR) increased from 2.4 to 2.6 in Q3FY18 from the previous quarter, because of single low-severity recordable injury. Total cash at bank at 31 March 2018 was A$2621 Mn after net dividend payments of $16 Mn and $4 Mn investment in ABM Resources. There were 4,371oz of gold inventory on hand at 31 March 2018. In last one year, the stock has been rising and was up by 62.32 per cent but slipped by 5.34 per cent in last five days as on July 03, 2018. The stock is trading at a higher level and looks “Expensive” as of now at the current market price of $4.780.


SBM Daily Chart (Source: Thomson Reuters)

 
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