Daily Brief Energy/Materials: Western Gold Resources, Iron Ore, Hellenic Petroleum Sa, Lake Victoria Gold , Serica Energy, Shougang Fushan Resources and more

• ASX 200 index rebalancing: West Gold and Yancoal added, Strike Energy removed
• Impact on stock prices and trading dynamics around index inclusions and removals
• Observations on companies prematurely entering the index and facing challenges after being removed

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• Iron ore prices declined 9.4% last week, closing below the monthly S1 pivot point, indicating resistance.
• Despite a brief 0.75% rise on Friday, prices signaled a bearish crossover in the 9D and 21D SMAs, reinforcing negative sentiment.
• The 91-price level remains strong support, with key resistance levels at 93.9, 95.7, and 98.9. A sharp reversal could push prices to 96.5 or higher.

HELLENiQ ENERGY’s Q224 results showed a continuation of Q124 trends, with refining margins trending down but increased year-on-year oil prices and operational improvements driving sales and earnings growth. Q2 sales of €3,274m were up 9.9% y-o-y, adjusted EBITDA of €232m was up 42% y o y and adjusted net income of €73m was up 192% y-o-y. The Q224 HELLENiQ benchmark margin declined to $5.5/bbl, from $8.8/bbl in Q124, but was above the $4.4/bbl achieved in Q223. The company noted that the Q324 estimated refining margin has averaged $3.9/bbl, which is lower than Q224, and management expects a more normalised H224.

• LVG announced an update on Barrick Gold’s exploration activities on the claims surrounding the Tembo Project, which LVG carries interest in.
• On September 4th, the Company announced submission of all documentation for the 10-year renewal and transfer of the Imwelo Mining License.
• The acquisition should close by the end of September.

• 1H24 production was 43.7 mboe/d, which is in line with our expectations.
• Net cash of ~US$143 mm at the end of June was also near our forecasts.
• The FY24 production is expected to be towards the bottom end of the guidance of 41-46 mboe/d, mostly due to more downtime than expected at the Triton hub.

• Shougang Fushan Resources (639 HK) ended H1 FY24 with over 10.5 bn HKD of net cash and investments, compared to 12.7 bn HKD of market capitalization. 
• At 1600 RMB/ton coking coal prices (current spot price), the business will be able to generate 1.1 bn HKD of profits, with an 80% payout implying a 7% dividend yield. 
• The current spot prices are 16% below the average five-year price of 1900 RMB/ton ( yield 10%), and at these prices, the company still makes an EBITDA margin of 40-45%.