Alumina Limited
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AWC Details
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Changes to AWAC JV agreement:Alumina Limited (ASX: AWC) stock surged over 5.8% on September 02, 2016 as the group reported that they would be implementing some changes in their Alcoa World Alumina and Chemicals (“AWAC”) joint venture agreement. They are making these amendments to enhance the Alcoa, Alumina shareholders value by establishing a greater strategic flexibility and autonomy for both partners and agree to terminate litigation. Allan Gray Australia Pty Ltd has also increased its voting power to 10.28% from 9.25%. On the other side, AWC is controlling its costs and accordingly cut its capex by $18m in the first half of 2016. The group enhanced its distributions by $31m, while maintaining a lower debt, indicating their solid balance sheet.
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Recommendation: We maintain a “Buy” on the stock at the current price of $1.375
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Declining cash costs of Alumina (Source: Company Reports)
Saracen Mineral Holdings Limited
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SAR Details
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Surge in net profit after tax: Saracen Mineral Holdings Limited (ASX: SAR) stock surged over 4.3% on September 02, 2016 driven by the recovering commodity prices. On the other hand, the stock fell over 15.95% (as of September 01, 2016) in the last five days while gold prices suffered a blow as Janet Yellen, US Federal Reserve chair hinted on a possible interest rate rise. Moreover. SAR stock already delivered over 102.4% during this year to date placing them at unreasonable valuations. The group otherwise delivered 132% increase in net profit after tax to A$25.9 million for FY16.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $1.32
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