Guy Le Page

RM Corporate Finance

Well well well, looks like Our Guy Le Page is back in form with some market ructions and a sizzling gold tip out of Ecuador.

There appears to be a sense of optimism in the junior space at the moment with a view that most of the “value destruction” is behind us and volumes starting to improve.

Global markets have responded favourably to a drop in inflation to 2.97%, compared to 4.05% last month and 9.06% last year.

Federal Reserve Chairman Jerome Powell indicated a few weeks ago that there are likely to be another two 25 basis point interest rate rises before year end, however the recent inflation numbers would suggest an imminent pause in rates.

Axel Merk, president and chief investment officer at Merk, recently stated in a Kitco interview that despite the near-term selling pressure on gold, he thought the yellow metal was performing well in a challenging economic environment. Notably gold is still up US$200/ounce from its October 2022 lows.

Merk said he is not convinced that the Federal Reserve will be able to get inflation under control before it breaks something in the economy or financial markets. Looking at the inflation threat, he added that with so much debt in the system, there is very little political will to bring inflation down.

Peter Cook-chaired Titan Minerals (ASX:TTM) made a big splash last week coming out with a JORC Resource upgrade to 43.54Mt at 2.23g/t Au and 15.7g/t Ag for 3.12 million ounces of gold and 21.98 million ounces of silver from its Dynasty project.

The project covers around 14,000ha in Ecuador with the JORC Resource comprising mostly epithermal mineralisation likely associated with a nearby porphyry. Importantly the resource contains a high-grade core of 17.3Mt @ 3.77g/t Au, 24.0g/t Ag for a contained 2.09 million ounces of gold and 13.33 million ounces of silver.

The other positive is that over half of this JORC Resource lies within 100m of surface. The previous JORC resource stood at 2.1 million ounces of gold and 16.8 million ounces of silver.

TTM intends to continue with an aggressive exploration program over its 9km footprint, with trenching and drilling also planned at Papayal and Trapichillo prospects where the company had previously identified multiple vein sets exposing high-grade gold and silver.

At an EV of just under $100 million, Le Page reckons the stock is “trading at an enterprise value of just under $30/ounce with plenty more in the tank by the look of it”.

“The stock may well come back after the spike last week but under 10 cents it looks cheap in a sector that continues to trade at a discount.”


Goldman Sachs

Goldman brokers have a Buy rating on MAAS Group Holdings (ASX:MGH), with a 12-month price target of $3.85 (versus current price of $2.52).

Maas Group provides construction materials, equipment and services with diversified exposures across the civil, infrastructure, mining and real estate markets.

Following MGH’s investor day in June where the company revised its FY23 guidance from $150m-$180m to $150m-$165m, Goldman has downgraded its view on MGH.

“We believe that the near-term residential environment will likely remain choppy until purchasers can gain greater comfort in the rate outlook,” said Goldman.

However, despite this challenging near-term environment, Goldman says it remains positive on the fundamental strength of MGH’s real estate division given various factors at play including a severe shortage in the Australian housing market.

Goldman Sachs also a Buy recommendation on tech stock, Fineos (ASX:FCL).

Fineos is a provider of core systems for life, accident and health insurance carriers globally with seven of the 10 largest life and health carriers in the US using its systems.

In June, Fineos announced a new contract win with US-based Guardian Life, a provider of group employee benefits and financial wellness solutions.

Guardian will implement four products from the Fineos Platform for its absence business, which involves the outsourcing of leave management from employers to life insurance companies.

Goldman says while the deal size and implementation phasing was not disclosed, it expects the Guardian contract to ease investor concerns over FCL’s trajectory to breakeven in the second half of FY24.

“As we outlined when we upgraded FCL to a Buy in January, the current economic environment of low unemployment and higher interest rates is supporting life insurance industry profitability, which bodes well for IT investment after multiple years of Covid uncertainty,” said Goldman.


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