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13 July 2018 07:36 AM
Overseas Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Dow Jones Industrial Average24,92524,700224.000.91-1.10
S&P 5002,7982,77424.000.870.82
NASDAQ7,8247,717107.001.391.67
FTSE 100 Index7,6517,59259.000.78-0.68
DAX 3012,49312,41776.000.61-3.08
CAC 40 Index5,4065,35452.000.97-0.86
Nikkei 225 (Japan)22,18821,932256.001.17-3.39
HKSE28,48128,312169.000.60-7.30
SSE Composite Index2,8382,77860.002.16-6.96
S&P/TSX Composite Index16,56716,417150.000.911.85
NZ 509,0168,98531.000.340.43
US Volatility (Vix)13
Overseas Market Report

US sharemarkets traded higher on Thursday with the Nasdaq index hitting an all-time record high, lifted by Facebook (+1.8%),Microsoft (+2.2%) and Amazon (+2.4%) shares. And shares of CA Technologies surged 18.7% after chipmaker Broadcom announced a US$18.9 billion deal to buy the US business software company. Delta Air Lines shares rose 1.5% after its strong quarterly result,boosted by higher airfares. The Dow Jones index rose by 224 points or 0.9%. The S&P 500 index rose by 0.9% and the Nasdaq lifted by 107 points or 1.4%.

Global oil prices were mixed on Thursday. Brent crude oil rebounded after the worst sell-off in 2 years on Wednesday. The IEA warned that spare oil capacity could be "stretched to the limit" by OPEC's supply boost. Spare capacity has been reduced in recent months by outages in Venezuela, Libya and Canada. Inventories at Cushing, Oklahoma fell by 929,399 barrels from July 6-10 according to Genscape. Brent crude rose by US$1.05 or 1.4% to US$74.45 a barrel, but the US Nymex fell by US5 cents or 0.1%to US$70.33 a barrel.

Base metal prices mostly rose on the London Metal Exchange (LME) on Thursday. Nickel rose by 2.3% after Deutsche Bank forecast supply deficits in 2018 and 2019. Gains in copper (+1.3%) were capped by rising supply concerns after Indonesia re-took a 51% stake in the Grasberg copper mine.

The gold futures price rose by US$2.20 an ounce or 0.2% to $1,246.60 an ounce. The spot gold price was trading near US$1,247 an ounce in late US trade. Iron ore rose by US80 cents or 1.3% to US$63.50 a tonne.

CommoditiesCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
Oil Brent74.4573.401.051.43-1.88
Oil - West Texas crude70.2270.33-0.11-0.165.37
Gold Spot $/OZ1,247.001,247.00-0.90-0.07-4.07
Silver Spot $/OZ16.0015.900.000.04-6.34
Iron Ore59.2059.100.000.05-4.90
Thermal Coal Newcastle118.10117.900.100.132.16
Coking Coal FOB ECP AUS185.80197.80-12.00-6.07-7.05
Aluminium ($US/t)2,0922,098-6.00-0.29-9.24
Copper Mar-18 ($US/lb)2.772.773.401.26-14.82
Lead ($US/t)2,1932,18013.000.58-10.86
Nickel ($US/t)14,09913,785314.002.28-6.85
Zinc ($US/t)2,5902,5864.000.14-19.84
Tin ($US/t)19,73019,456274.001.41-7.00
Uranium ($US/lb)23.0023.000.000.00-1.07
Australian Market ReportCurrent
Level
PreviousChangeDaily %
Change
Monthly %
Change
ASX All Ords6,3506,30050.000.793.53
S&P/ASX 2006,2686,21653.000.854.06
ASX 24 Futures6,241
Australian Market Report

Thursday 12 July - close. Strong showings from healthcare heavyweights and the major banks have propelled the Australian share market to its highest close for a decade overcoming a weak European and US lead. Fears of escalating trade tensions between economic superpowers China and the US which had weighed on global markets seemed to ease. The benchmark S&P/ASX200 closed up 52.7 points, or 0.85 per cent, at 6,268.3 points on Thursday, the highest close since December 2007, while the broader All Ordinaries index gained 49.6 points, or 0.79 per cent, to 6,349.8 points.

Ashanti Headlines

Independence Group NL (IGO.ASX, 502cps, m.cap A$2,934.6m with 586.9m SOI, Cash $66.1m, Precious & Base Metals Producer)

We have been fielding an increasing number of inquiries from clients seeking quality Nickel exposure on the ASX (particularly from our Asian Institutional clients). Yesterday, we caught up with the management of Independence Group (IGO.ASX) and received an update on their operations and their outlook for the battery metals. 

Please see below for our key takeaways and pls call the desk on +61 8 6169 2668 if you’d like to discuss further;

IGO Company Highlights

  • We expect IGO to report strong cash-flows for the Jun Qtr (based on recent updates) that has IGO approaching a Net Cash position. 
  • Forecasted cash position means IGO are likely to revise their current dividend policy in the coming months (divvy policy is currently min 30% of NPAT). We expect dividends to be a function of FCF or EBITDA. 
  • Tropicana continues to be a cash cow for the company (+A$30m/qtr) and with an improving grade and stripping profile, we expect improved performance (increased prod at lower AISC) in FY19 & 20.
  • Expecting some positive news around the underground potential of Tropicana in the 4th qtr. Boston Shaker (subject to positive feasibility study) will be the first development, the increased grade from underground with help off-set the reducing OP head grade. IGO are expecting first ore for UG in 2020.
  • Nova ramp-up is progressing well. IGO attributes the soft 3rd qtr to a change in mine plan (which is now complete) and guided to improved production in FY19 & 20. 
  • Feasibility study into the production of Nickel Sulphate from Nova concentrate looks like it might be complete just in time for Diggers and Dealers (convenient). Nickel Sulphates currently received a significant premium in the market and IGO would like to capture that premium via a downstream process, or at least leverage off the study to negotiate better payability terms for their concentrate. 
  • IGO continues to consolidate ground in the Fraser Range and their spend in the region will only increase (A$30M in FY18). Exploration has been systematic to date but with 20,000m of DD drilling in FY19, they remain confident of another discovery. 
  • Creasy and IGO continue to discuss potential collaboration agreements on geological data on the Fraser Range (could be an interesting development in light of recent media and transactions). 
  • IGO are looking to increase exposure to the battery metals and have acknowledge they are focussed on finding a Tier 1 Lithium project. 
  • Regional exploration portfolio will continue to expand (such as the JV at Lake Mackay with PRX.asx) providing a longer term pipeline of projects. 
  • In brief, IGO offers investors strong cash flow from operations at Nova and Tropicana, leverage to an improving Nickel price, and an exciting exploration portfolio in the Fraser Range and Lake Mackay. 

Have a question? admin@ashanticapital.com.au

ERA Communications