Avoca Resources (AVO) is a gold producer and has projects located in Western Australia and South Australia and has been a hot stock as of late.

AVO has announced that it intends to merge with Turkish-based Anatolia Minerals Development.

The proposed tie-up will be a merger of equals, with the new company to be called Alacer Gold Corp which would have a market cap of around US$2 billion.

The merger would create a global mid-tier gold producer, which would be able to ramp up production to 400,000 ounces in 2011, and 800,000 ounces by 2015.

Furthermore, its increased size and scale would give the new company greater access to capital markets, which would allow it to lower funding costs over time.

Nevertheless, the market wasn’t too happy with the merger details, sending AVO Australian share price down 4.2% yesterday.

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Sundance Resources (SDL) is an Australian-based iron ore miner, whose main interest is in the Mbalam Project in Cameroon.

SDL was one of the more widely known Australian stocks in recent months after a number of its executives were killed in a plane crash in Cameroon in late June.

More recently, however, SDL entered into a memorandum of understanding (MOU) with China Rail.

The MOU commits the parties to develop the railway track, and rolling stock, required to support the planned iron ore output of 35 mtpa from SDL’s Mbalam Project in Cameroon.

The MOU is, however, subject to government approvals, funding and title requirements for the rail corridor in addition to other assets.

SDL was one of the hot stocks following the MOU announcement, with its share price rocketing almost 20%.

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AWB Limited (AWB) is an agricultural company, providing two main businesses focusing on rural services and commodity management.

AWB is a hot stock after increasing its forecast for wheat sales this year, amid concerns about supply shortages in northern Europe.

AWB upgraded its forecast for wheat pool returns by $9 to $22, sighting supply shortages and a bumper harvest in central Queensland due to recent rain.

As a result, AWB stated there is now very strong interest in Australian wheat and should be one of the stocks to watch.

AWB shares climbed 0.3% yesterday.

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Macquarie Group (MQG) is Australia’s largest investment bank, and is a leading provider of banking, financial advisory, investment, and funds management services.

It is also one of the main blue chip stocks in the share market.

MQG recently advised that it expects a 25% drop in 1H11 earnings from a year ago due to weak trading conditions in most of its markets.

MQG advised that activity was being hampered at its Securities, Capital and Fixed Income, Currencies and Commodities divisions, and that uncertain conditions were making short-term forecasting difficult.

Despite the downgrade, MQG maintained that FY11 earnings are expected to be broadly in line with FY10 assuming more normal market levels.

MQG shares slumped 4.7% following the announcement, and it will remain as one of the stocks to watch in coming months given that further profit downgrades cannot be ruled out.

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Blue chip miner BHP Billiton is the world’s largest diversified resources company and a major player in the commodities market.

BHP is reportedly considering making a takeover offer for US oil giant, Anadarko Petroleum.

The report also indicated BHP considered making an offer for Woodside Petroleum (WPL) last year, but later abandoned the attempt.

Anadarko’s shares have struggled of late, as the company has a stake in the Gulf of Mexico Macondo well which has been the source of the largest oil spill in US history.

Australian share price for BHP finished up one cent last Friday to $38.33.

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Aurora Oil & Gas (AUT) is an oil and gas exploration, development and production company operating in North America since early 2005.  With a market capitalization of almost $300 million, it is a small cap hot stock, outside of the ASX 200.

The plan for the development of the company’s oil and gas interests is focused on the US, where large markets and existing infrastructure provides the opportunity for attractive economic returns.

Maiden revenue is expected in the 4Q10. AUT boasts a sound balance sheet with no debt and US$40 million in cash on hand.

The company has the potential to deliver production and profit growth for many years from its existing assets, which are already benefitting from a strengthening commodity market.

2010 is expected to represent a significant year of value creation for AUT from activities that will include drilling, testing, production and land acquisition across the portfolio.

The company is well funded for its existing activities and is well positioned to pursue new oil and gas opportunities.

More about the Business

AUT is focused on onshore US in the south east Texas Eagle Ford shale / Austin Chalk, known as the Sugarkane Gas & Condensate Field.

The company has embraced low-risk development assets, with a drilling inventory in excess of 500 well locations and a very significant production growth profile.

The Sugarkane Field involved an initial acreage acquisition in 2006. Farmin is nearing completion, giving excellent results, with drilling times and costs being reduced dramatically.

Sugarkane consists of a high quality Austin Chalk reservoir, directly overlaying an organic, rich and calcareous regional Eagle Ford shale.

The field has been delineated by more than 25 wells, with consistent reservoir and hydrocarbons from all penetrations.

A Liquids Story

AUT calls itself a “liquids story”, being invested heavily in oil as liquids are more valuable than gas.

AUT is highly leveraged to oil prices. High condensate yields and rich gas significantly increase gross revenue for each mscf produced.

The Eagle Ford is a liquids rich trend. The relative energy differential (BTU) for oil/gas is approximately 6:1. The value ratio of oil/gas has been trending up in recent years.

The Eagle Ford is a premium US shale play, with large US and multinational companies having invested significantly to enter.

These companies include BP, Shell, ConocoPhillips, Exxon/Mobil and Anadarko, amongst others.

An active drilling program is delivering best in trend results. Eagle Ford drilling activity continues to grow rapidly, with some 50 new wells drilled and completed along the trend to the end of 2009, with a dramatic ramp up in 2010.

AUT currently estimates there are 80 rigs operating in the trend.

Eagle Ford drilling has demonstrated improved initial production rates, a decrease in early decline rates and a substantial reduction in costs.

Activity Forecast

AUT’s acreage boasts more than 500 drilling locations. Under current field rules, each gas well holds around 1,320 acres and oil wells of 320 acres.

The group’s drilling plan through 2011 is focused on securing land by production.  Revenues from carry wells are expected in the 4Q10.

AUT’s maiden independent reserves report was released in mid-August. The following reserve allocations were made, with an effective date of 1 July 2010:

1P (Proved) – 1,523,000 bbls, 8.3 Bcf and NPV(10) US$70.2 million;

2P (Proved plus Probable) – 4,317,000 bbls, 24.9 Bcf and NPV(10) US$190.1 million;

3P (Proved plus Probable plus Possible) – 33,207,000 bbls, 138.0 Bcf and NPV(10) US$986.2 million.

Company chairman Jon Stewart noted that the maiden reserve statement provides independent verification of the value proposition for AUT and the rapid de-risking that has resulted from the drilling program to date.

Looking Ahead

AUT have a clear and agreed drilling plan going forward, for which the group is already funded, which will see the majority of the possible reserves moved into the proved and probable categories through the next 12 – 18 months.

Significant increases in production and cash flow to AUT from the development of this world class on-shore asset will continue to grow shareholder value for some time.

Preliminary results indicate robust economics, with Eagle Ford looking to be one of the best shale plays in the US.

AUT’s initial well results are excellent, the group boasts a high liquids ratio, good flow rates and a low reliance on gas prices.

AUT is the largest Sugarkane participator of listed juniors, has no debt and US$40 million in cash.

The company boasts huge growth potential, with project maturity through continuous drilling to deliver production and profit growth for years to come and is one of the stocks to watch.

Australian share price for AUT last closed up 2.3% to 67 cents.

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Nufarm (NUF) produces agricultural fertilisers and chemicals used for crop protection internationally, with less than half its sales coming from Australia.

The company is also actively involved in the marketing and sale of branded, off-patent crop protection and seeds treatment products.

Recently, NUF announced that FY10 net profit is expected to come within its previous guidance of $55 million – $65 million.

Worryingly, however, net debt of $620 million was much higher than previous estimates of $450 million, due to increased working capital levels.

The higher debt levels means NUF is now in a minor breach of one of its loan covenants, however the breach will be covered by the waivers currently being put in place.

Nevertheless, NUF was one of the shares to sell following the profit announcement, plunging 6.8% in a day when the stock market jumped over 2%.

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Centro Retail Group (CER) is a diversified property trust with domestic and international assets by shopping centre format. It currently has a market capitalisation of over $360 million.

CER has recorded a $113.3 million net profit in FY10, compared to a $2.7 billion loss a year earlier, which makes it one of the shares to watch.

The result was driven mainly by the huge asset write-downs in FY09, as property income actually fell 22% due to adverse foreign exchange movements.

CER is struggling to contain its mountainous debt, with the group advising that its planned restructure and recapitalisation are now expected to be completed by the end of 2011.

CER was also cautious about the outlook, stating that the US market conditions were difficult, and that it was contending with a constrained capital environment in both Australia and the US.

CER failed to declare a final distribution, yet still managed to fly 6.5% yesterday.

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Kingsgate Consolidated (KCN) is a gold miner, operating in South East Asia, South America and Australia.

The company’s trump card is its Chatree Mine in Thailand, which is currently undergoing yet another expansion review.

Like many other Aussie gold miners, KCN has been one of the stocks to watch in recent months given its leverage to record gold prices.

KCN recently reported its full year results, which showed a more than doubling of FY10 net profit to $73.1 million thanks to a 54% jump in revenue.

The huge growth in revenue was driven by higher spot gold prices in addition to increased production.

KCN’s Chatree gold mine produced 132,628 ounces of gold for the year, which was also the first time the mine operated for the full year.

KCN forecast FY11 gold production of 120,000 – 130,000 ounces, however this was subject to the timing of accessing the remainder of its Chatree North mineralisation.

KCN declared a final dividend of 20 cents per share, up from last year’s 15 cents.

KCN was among the stock market gainers on the day of its results announcement, rising 2.8%.

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Fairfax Media (FXJ) is a blue chip diversified media company with a market capitalization of over $3.4 billion.

FXJ has posted a FY10 net profit of $282.1 million, swinging from a $380.1 million loss a year earlier.

On an underlying basis, net profit rose 23% to $278.7 million, beating market forecasts, with core earnings at most of FXJ’s divisions recording growth from a year ago, making it one of the ASX stock picks.

Earnings at the Australian Regional Media business fell 2% amid lower advertising revenue, however this was offset by strong growth at FXJ’s online division.

The first seven trading weeks of FY11 have been positive for FXJ, with revenues up 5% on-year, and if current trends continue, first-half earnings are expected to grow by the high single digits.

FXJ declared a final dividend of 1.4 cents per share, and its share price soared 4.4% on Friday.

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