Fortescue Metals Group Ltd
FMG Details
Commodity price headwinds:In the September quarter updates, Fortescue Metals Group Ltd (ASX: FMG) announced that its cash production costs (C1) were lowered to a record US$12.15 per wet metric tonne (wmt), which is a slight reduction over the prior quarter and a 10% improvement over the September 2016 quarter.This seems to come at the back of structural improvements, productivity and efficiency efforts and innovation and technology efforts. The company has a gross debt of US$4.4 billion at 30 September 2017. Moreover, the decision on Iron Bridge is expected in FY18.
Production Summary for Q1 FY 18 (Source: Company Reports)
Meanwhile, FMG stock has fallen 14% in last three months as on November 02, 2017 owing to softness indicated for iron ore prices in the coming year. Lately, the benchmark 62% fines were said to surge over 1% to US$59.35 a tonne while low grade 58% fines produced by FMG dropped to lower levels (according to Metal Bulletin). Primarily, FMG price realisations continued to be impacted byheavy discounting on low grade ore. On the other hand, the group is speculated to look for opportunities in the lithium sector. Given the current scenario in view of commodity price movements and absence of any potential update/ significant developmental project, we believe that the stock is “Expensive” at the current price of $4.80
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FMG Daily Chart (Source: Thomson Reuters)
Sandfire Resources NL
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SFR Details
Progress at Doolgunna:Sandfire Resources NL (ASX:SFR), whichis the exploration farm-in joint venture partner of Enterprise Metals Limitedat Doolgunna in Western Australia, has continued the aggressive exploration activity across multiple prospects within the joint venture tenements.Sandfire has continued with intensive drilling programs at Doolgunna, and has completed 1,481 drill holes for 125,672m in Enterprise tenements.Further, the diamond and RC drilling has been planned for next quarter. The group had otherwise reported for a mixed September quarter result with a fall in copper production to 15,258 tonnes while maintaining the overall FY2018 production guidance. Further, shipments were lower than production and compounded the weak result from a cash flow perspective. Meanwhile, SFR stock rose6.7% on November 03, 2017 while positive sentiments seem to be taking some charge; however, the stock trades at slightly high levels and volatility prevails. While there could be exploration success to extend the mine life at DeGrussa; looking at the overall scenario, we still believe that the stock is “Expensive” at the current price of $6.25
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SFR Daily Chart (Source: Thomson Reuters)
Perseus Mining Ltd
PRU Details
Confirmed high quality of Yaouré Gold Project:Perseus Mining Ltd (ASX:PRU) has completed the Definitive Feasibility Study (DFS) for its Yaouré Gold Project in Côte d’Ivoire, West Africa, confirming the high quality of the gold project. Yaouré is based on an estimated Ore Reserve of 26.8 Mt with an ore grade of 1.76g/t gold and 1.52 million ounces of gold. The outcome has indicated for attractive economics at a range of gold prices and discount rates.
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Resource Model (Source: Company Reports)
Moreover, the development of Yaouré is well within Perseus funding capacity and the project hassignificant potential to incrementally expand Mineral Resources and Ore Reserves. The group is tracking well on many fronts such as construction of the Sissingué project in Côte d'Ivoire was reported to be 77% complete by the end of the September quarter and development remains on budget. Meanwhile,PRU stock has risen 14% in last six months as on November 02, 2017, and we retain a “Buy” recommendation at the current price of $0.32
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PRU Daily Chart (Source: Thomson Reuters)
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