How recent news flow affected four ASX stocks

  • Feb 04, 2020 AEDT
  • Team Kalkine
How recent news flow affected four ASX stocks

The key factor that drives price performance is demand and supply. If the demand of a stock increases and supply decreases, the prices rise and if the demand decreases and supply increases, prices fall. The relationship between demand and supply is very sensitive to the news flow at the moment. Normally, bad news has led investors to sell stocks and thus creating an increase in supply and decrease in demand. This triggers prices to fall. The opposite happens, when there is good news in the market.

In this article, we will see the effects of news on the prices of stocks.

Resolute Mining Limited (ASX: RSG)

Resolute Mining Limited is engaged in the business of gold mining, development of resource projects and prospecting and exploration for minerals

The Company Announces Debt Repayment of US$130 Million

The company has repaid US$130 million acquisition bridge facility which funded the cash component of the company’s acquisition of Toro Gold Limited. Reimbursement of the facility was financed from proceeds of Resolute’ s recent effective equity raising in blend with accessible cash on hand. This reduction in debt will lessen the company’s continuing interest payments and total cost of borrowing in addition to abridging its capital structure.

Resolute Mining Sells Ravenswood for $300 Million

Resolute Mining Limited has signed an agreement for the divestment of the Ravenswood Gold Mine in Queensland to a consortium involving Golden Energy and Resources and EMR Capital.

  • The sale offers strategic clarity and is coherent with the company’s goal of being a low-cost multi-mine African-focused gold producer;
  • The deal comprises a $100 million upfront payment with up to $200 million in potential payments contingent on future gold prices, future gold production, and the investment outcomes from the Ravenswood Gold Mine.

Recently, the company released its guidance for FY20, and it expects to increase its production to 500,000 ounces this year, which is about 30% higher on year on year basis.

  • All-In Sustaining Cost is expected to be US$980/oz;
  • This is almost 10% decrease over FY19 costs;
  • Gold production from Syama is expected to be 260,000oz at an AISC of US$960/oz;
  • Gold production from Mako for FY20 is expected to be 160,000oz at an AISC of US$800/oz;
  • At Ravenswood a production target for FY20 to be set at 80,000oz of gold at an AISC of US$1,200/oz.

The company also reported production for 12 months to 31st December 2019. Key highlights are:

  • Total gold production of 384,731oz and gold sales of 394,920oz relative to production guidance of 400,000oz;
  • AISC of US$1,090/oz relative to cost guidance of US$1,020/oz;
  • Average gold price received of US$1,344/oz from total gold sales of 394,920 oz.

Stock Performance

The stock of RSG closed the day’s trading at $1.100 per share on 04 February 2020, down by 1.345% from its previous closing price. The company has a market capitalisation of $1.16 billion as on 04 February 2020. The total outstanding shares of the company stood at 1.04 billion, and its 52-week low and high is $0.965 and $2.120, respectively.

Newcrest Mining Limited (ASX: NCM)

Newcrest Mining Limited is into exploration, development, mining and sale of gold.

The Company Decides to Divest Gosowong Mine

The company has authorized an agreement to sell 100% of NSH which holds a 75% interest in PT Nusa Halmahera Minerals, which manages the Gosowong mine in Indonesia. Key Highlights of the agreement:

  • $5m cash deposit paid on execution of the sale and purchase agreement;
  • $55m cash payable on transaction completion;
  • $30m deferred cash payable 18 months after completion.

Executive Changes at The Company

The company has announced some adjustments to the structure of its Executive Committee. After the changes, the company’s committee will compromise:

  • Chief Executive Officer – Sandeep Biswas
  • Chief Financial Officer – Gerard Bond
  • Chief Operating Officer (PNG) – Craig Jones
  • Chief Operating Officer (Australia, Indonesia & Americas) - Phil Stephenson
  • Chief Technical & Projects Officer – Suresh Vadnagra
  • Chief Legal, Risk & Compliance Officer – Francesca Lee
  • Chief People & Sustainability Officer – Lisa Ali;
  • Chief Development Officer – Seil Song.

Stock Performance

The stock of NCM closed the day’s trading at $29.310 per share on 04 February 2020, down by 0.475% from its previous closing price. The company has a market capitalisation of $22.64 billion as on 04 February 2020. The total outstanding shares of the company stood at 768.84 million, and its 52-week low and high is $23.530 and $38.870, respectively.

Lynas Corporation Limited (ASX: LYC)

The company has been given a Major Project Status from the Australian Government to create its new Rare Earths handling plant in Kalgoorlie, WA. Major Project Status officially acknowledges the strategic importance of the scheme to the Australian economy and offers a single-entry point for Commonwealth Government agreements as well as project assistance and management and aid with State government approvals.

The factory is projected to generate up to 500 jobs through peak construction and boost the company’s staff in the Goldfields to more than 200 people. The company plans to operate the plant with a residential, local staff and maintain its relationship with WA School of Mines and Curtin University.

LYC provides updates related to PDF

The company has provided updates related with the Permanent Disposal Facility (PDF).

  1. State Government Consent

State Government of Pahang has announced its permission to a location for the PDF for Water Leach Purification (WLP) excess. The authorized location is a secluded site around the Bukit Ketam area. Based on initial due diligence performed by the company and its advisors, the company believes the site will be appropriate as the site of the PDF.

  1. Appointment of PDF Contractor

The company has selected Gading Senggara Sdn Bhd for the contractor to handle the whole PDF project, involving operation, design, construction and institutional control throughout post-closure of the capacity for a time period to be determined by the regulatory authorities. The approximate total amount to be there paid to GSSB for management of the entire PDF project is US$98 million, as reviewed in the table below.

Source: Company’s Report

Stock Performance

The stock of LYC closed the day’s trading at $2.110 per share on 04 February 2020, down by 0.939% from its previous closing price. The company has a market capitalisation of $1.49 billion as on 04 February 2020. The total outstanding shares of the company stood at 697.38 million, and its 52-week low and high is $1.540 and $3.160, respectively.

Dacian Gold Limited (ASX: DCN)

Dacian Gold Limited is an Australian middle-tier gold, which operates the Mt Morgans Gold Operation (MMGO) near Laverton, Western Australia.

The company has provided its operating and financial results for the December quarter, 2019

MMGO produced 33,235 ounces during the December quarter at an MMGO AISC of $1,737/oz. Total production for 1HFY20 was 75,237 ounces, in line with the company’s guidance of between 67,000- 77,000 ounces. AISC for the 1HFY20 was $1,562/oz, with guidance expectations of costs being higher over the 1HFY20 versus annual guidance of $1,400-$1,500/oz. Lower gold production when compared to the September quarter was primarily a function of a lower average mill feed grade. The mill feed grade was in line with forecast expectations due to mining lower grade ore zones in both the Westralia underground and more specifically, the Jupiter open pit.

Key Processing Statistics (Source: Company’s Report)

Stock Performance

The stock of DCN has been suspended from quotation immediately, at the request of the company, awaiting the release of an announcement regarding an update to its Ore Reserves, Mineral Resources and life-of-mine plan. The total outstanding shares of the company stood at 228.43 million.

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There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

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