• Canaccord slaps Speculative Buy on Argosy, says price could quadruple
  • Goldman sees a more than 10pc uplift for Magellan share price

 

Argosy’s share price could almost quadruple, says Canaccord

Canaccord Genuity has just released a “Speculative Buy” report on Argosy Minerals (ASX:AGY), with a price target of 80c (versus current price of 22c).

Note that Canaccord attaches ‘Speculative Buy’ to stocks with significantly higher risk that typically cannot be valued by normal fundamental criteria. As a result, investments in the stock may result in material gain or loss.

AGY is a lithium development company progressing the Rincon Lithium Project in Argentina.

The company plans to commission its 2ktpa plant in 2023 before moving to development of an incremental 10ktpa project. It also owns the Tonopah early stage lithium prospect in Nevada, US.

Canaccord likes AGY for several reasons.

The first reason is the company’s recent update on the 2,000tpa Rincon Project, where commissioning and ramp up works are progressing rapidly.

Argosy produced 10 tonnes of battery quality lithium carbonate in August, representing a 2ktpa plant running at around 6% of nameplate.

Secondly, a number of mechanical improvements have been made at the project to improve throughput.

“Key to this was on the primary filtration circuit which had been constraining the ramp-up,” said Canaccord.

Importantly, AGY has also validated its process technology, and is producing battery-quality carbonate.

“We see this as a critical element for AGY to have achieved,” says Canaccord, adding that its analysts will visit the AGY facility in Argentina in late September.

AGY has also engaged with key Salta government officials in Argentina to expedite the Environmental Impact Assessment approval process.

“Concurrently, the company is progressing pre-development works for the 10ktpa operation, to ensure facility construction can commence immediately following EIA approval.”

In addition, AGY has recently completed exploration and production well-drilling with the goal of expanding its Resources and Reserves. Exploration drilling was conducted at six drill sites, with core and brine samples currently in the lab and awaiting results.

The company is targeting a Mineral Resource upgrade by the end of this calendar year.

 

Goldman sees upside in Magellan

Goldman Sachs has a ‘Neutral’ recommendation on Magellan Financial Group (ASX:MFG), with a 12-month price target of $10 (vs current price of $9.09).

MFG provides asset management services to high net worth and retail investors in Australia and New Zealand, as well as institutional investors globally.

There are several reasons why Goldman likes the stock.

First, Goldman believes MFG has a relatively well-diversified business across strategy and channel.

“Valuation of the core funds management business are relatively cheap compared to peers,” added GS.

Second, MFG’s expense base is shrinking.

In FY23, MFG posted lower than expected expenses at $126.8m. Guidance for FY24 funds management expenses is even lower at between $95m and $100m, reflecting strong cost control and some drop off in staff retention costs.

“We still remain cautious on revenue margins across institutional and retail, where we think there could still be some pressure on fees,” said GS.

In terms of governance, David George has now returned to CEO, and Gerald Stack as head of investments following changes made.

“MFG has a relatively low key person risk and a diversified shareholder base,” GS said.

“However, we are cautious on MFG noting that the trajectory for net flows has been weak, with no clear signs of stabilisation in net outflow trends.”

Goldman noted that declining fees is another risk factor as MFG faces competitive pressures to attract flows.

 

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