Resolute Mining Limited

RSG Details
· Despite improving production outlook, concerns over costs persist: Resolute Mining Limited (ASX: RSG) surged over 1.7% on November 01, 2016 driven by the gold prices rally while Vinva Investment Management ceased to be a substantial holder. The group’s core project Syama Gold Mine in Mali is a long term asset with parallel supplied and oxide processing plants. Processing of sulphide open pit stocks is forecasted for FY17 while transition to open pit mining started at the Ravenswood Gold Mine in Queensland which has a project life till 2029. RSG finished feasibility study on the Bibiani Gold Project while infill and extensional drilling would be done in FY17 with the aim of extending the potential mine-life and enhancing project economics. The group aims to produce >450,000 ounces per annum from three operations by 2020. On the other hand, the group is forecasting 300,000 ounces of gold production for FY17, at All-In Sustaining Cost (AISC) of A$1,280 per ounce (US$934 per ounce). The margins could be under pressure based on gold price movement. Moreover, the group set a budget of $19 million for FY17 which would enable extensive drilling of major targets at their main prospects. RSG stock fell over 21.6% in the last four weeks and we believe the pressure could continue in the coming months. The group will conduct its AGM on November 29, 2016.

· Recommendation: We give an “Expensive” recommendation on the stock at the current price of – $ 1.53


Key assets locations (Source: Company Reports) 

National Storage REIT

NSR Details
· Acquisition strategy for expansion: National Storage REIT (ASX: NSR) stock surged over 1.4% on November 01, 2016. The group recently announced their intention to undertake portfolio recycling opportunities in Croydon, Melbourne. The group intends to acquire a 5,100 sqm parcel of land, which is directly adjacent to the existing National Storage Croydon South center while constructing a new storage center and mini warehouse development on the new site in order to expand the current Croydon South center. NSR intends to relocate the current customer base from the Croydon center to the expanded Croydon South development. The group would also sell their original National Storage Croydon center, which would be developed into residential dwellings, with settlement upon completion of construction of the new storage center. Management reported that their Portfolio recycling is a part of their core asset and portfolio management strategy, which would add further value to the portfolio. National Storage Affiliates bought Manatee County iStorage facilities at 6403 State Road 64 E. for $10.2 million. NSR stock fell over 10.5% in the last four weeks (as of October 31, 2016) offering attracting levels for investors.

· Recommendation: We give a “Speculative Buy” recommendation on the stock at the current price of – $ 1.47

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