Orocobre Limited

ORE Details
· Positive sentiments drove the stock higher: Orocobre Limited (ASX: ORE) stock surged over 20.4% on October 31, 2016 driven by lithium carbonate prices, and thus, positive market sentiments and stock upgrades from the analysts including those of Macquarie and Deutsche Bank. The group also finished the scoping study for the Olaroz Stage 2 expansion of 17,500 to 25,000 tonnes per annum lithium carbonate equivalent (LCE) while the results will be released soon. Average FOB price surged 24% from May/June 2016 to US$9,334/tonne during the September quarter. ORE reported a revenue rise of 45% year on year (yoy) to $33.5 million during the September quarter from $ 15.4 million in the same period of last year. However, the group reported a rising Cost of production by 1% to USD3,579/tonne during the September quarter as compared to the same quarter of prior corresponding period. Moreover, the group’s production rose only 2% on a yoy basis to 3,013 tonnes. ORE stock have been under pressure falling over 25.2% (as of October 28, 2016) in the last three months.

· Recommendation: Given the current scenario, we believe that the stock is “Expensive” at the current price of $ 3.83



Olaroz production highlights (Source: Company Reports) 

OZ Minerals Limited

OZL Details
· Commodity prices’ rally drove the stock higher: OZ Minerals Limited (ASX: OZL) stock surged over 5.5% on October 31, 2016 driven by the commodity prices rally. The group reported a decent third quarter performance wherein the copper production surged 5% as compared to the earlier quarter. OZL revised their gold production guidance for 2016 to 115,000 - 120,000 ounces due to extended Prominent Hill power outage. The group’s ongoing focus on costs is evident from its C1 costs of US 70.7c/lb which is the lower end of guidance range. The group’s annualized procurement cost savings rose to $29 million. OZL continued its shareholder buyback program of $19.1 million while paid $18.2 million in dividends during the quarter. The shares of OZL generated returns of over 61.2% (as of October 28, 2016) during this year to date.

· Recommendation: We give a “Hold” recommendation on the stock at the current price of $ 6.70

 

Third quarter performance (Source: Company Reports)

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