Azimuth Resources (ASX:AZH) is a junior gold and uranium explorer, with projects based in Guyana and South America.

The group holds approximately 8000km² of gold tenements in Guyana, and its main asset is the West Omai gold project, which it is currently exploring.

AZH’s other interests are the East Omai gold project, the Amakura uranium project, and the Pandanus West uranium project in Australia.

The company is an exciting prospect that has produced encouraging drilling results at West Omai. There is growing hope that the group’s maiden resource discovery will be significant enough to help underpin the start of production.

Go Guyana

The West Omai project is AZH’s flagship project, and which may contain the discovery of significant gold resources.

West Omai is part of the same corridor that hosts the Omai gold mine, which is the biggest gold mine in South America, having so far produced 3.7 million ounces of gold.

Azimuth Resources is expected to release a maiden resource estimate from the project sometime this quarter.

Given West Omai’s proximity to the Omai gold mine and the encouraging drilling results thus far, a significant resource discovery could be on the cards.

Gold shoots higher

Being an explorer, AZH is tightly leveraged to gold prices.

Although gold was sold-off heavily in September, the precious metal has bounced back strongly in recent weeks amid global economic uncertainty.

The spot price of gold is back above US$1750 an ounce after crashing to just above US$1500 in late September.

Europe’s debt crisis and the potential for another round of bond purchases by the Fed is likely to lure more nervous investors back into gold, which is likely to support prices further.

Such an outcome would be very beneficial for AZH.

Balanced out

AZH completed a $19.4 million capital raising on 31 October, giving it the balance sheet strength to pursue its Guyana exploration program well into 2012.

The raising has come at an ideal time for AZH, which has smartly taken advantage of its strong share price to shore up its finances.

The group also announced plans in April 2011 to list on the Toronto Stock Exchange.

The listing is expected to boost AZH’s global profile, which will come in handy when the group looks at future capital raisings.

Outlook

AZH an exciting prospect that has produced encouraging drilling results at its West Omai project.

The group is expected to release a maiden resource estimate from the project sometime this quarter, and there is hope the estimate will be significant enough to help underpin the start of production.

AZH’s fortunes are closely linked to the price of gold, and with the precious metal on track for continued gains, we believe this will translate into continued strength for AZH’s share price.

This is one of the hot stocks of the year, rising from 25 cent in June to currently be trading beyond 50 cents.

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Computershare (ASX: CPU) provides technology systems and services for the international securities industry. Its core services comprise the provision of shareholder registry services, employee share plans and associated services such as printing and share registry analytical services.

Computershare’s US$550 million takeover of Bank of New York Mellon Corp’s investor service business has been approved by U.S regulators.

This deal expected to be completed around the 1^st of January and will make CPU the largest provider of share-registry services in the world.

Computershare is one of the hot stocks of the day up around 15%.

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WorleyParsons (ASX:WOR) provides professional engineering and management services to the energy, resource and complex process industries.

WOR offers a broad range of services, from feasibility studies to design and project services, and is exposed to a number of sectors.

The group is a leader in its industry and has established long-term relationships with a number of companies, including some blue chip stocks.

Despite facing obstacles in FY11, WOR was able to grow its profit and revenue, with the Hydrocarbons business driving the result.

Moreover, WOR is ideally placed for the future, as the lure of higher energy prices is likely to drive demand for its services from the bigger oil companies.

FY11 results highlight underlying strength

On 24 August, WOR reported a 25% lift in FY11 net profit to $364.2 million. On an underlying basis, profit was up 2.5% to $298.5 million, matching previous guidance.

A final dividend of 50 cents was declared, bringing the full year dividend to 86 cents per share.

It was a solid result considering WOR faced a number of headwinds such as the strengthening AUD, Middle East instability and natural disasters.

The result didn’t really reflect the strength of the underlying business. Revenue grew 19% on-year to $5.9 billion, driving by a strong performance in the Hydrocarbons business.

The group was also in financially strong shape, with a gearing ratio of just 22% and operating cash flow growth of 5.1% in FY11. Moreover it had more than 50% in untapped debt facilities.

Taken together, this tells us WOR has significant firepower to expand its business –organically and/or through M&A activity.

The group forecast good underlying profit growth in FY12, continuing the momentum displayed in the 2H11. The guidance was reaffirmed at WOR’s AGM last week.

Hyper about Hydrocarbons

The majority of WOR’s earnings are in the Hydrocarbons division. Hydrocarbons are organic compounds, found mostly in crude oil.

WOR’s leverage to the energy market is a key attraction, particularly as demand for oil and gas is expected to strength in coming years due to emerging market growth.

The recent market turbulence has raised questions about faltering energy demand in the developed economies, which has been a factor behind WorleyParson’s recent share price weakness.

However we believe these fears are overblown given the oil supply/demand imbalance (dwindling oil supplies vs. growing energy demand) is only expected to worsen in coming years.

The lure of energy price appreciation at a time of growing demand is likely to see the big energy companies continue their ramp up of capex spending, putting WOR in an ideal position to accelerate its contract win rate.

LNG is the future

The big oil companies have also recognized that the world is moving towards more unconventional sources of energy such as LNG.

There are number of massive projects being undertaken throughout Australia, and WOR has had a hand in some of the key ones such as Pluto and more recently, Wheatstone.

WOR won a $235 million contract from Chevron for the construction of management services at the Wheatstone Project.

WOR’s experience in developing LNG projects, coupled with the established relationships it has with its blue-chip clients, makes it ideally placed to benefit from this increased focus on alternative energy.

Outlook

As the global growth engine continues to shift from developed economies to the developing regions, there will be increased demand for commodities.

As mining companies look to meet this demand, there is going to be a significant increase in capex activities over the coming years.

This will strengthen the market for WOR’s services, providing it with plenty of growth opportunities, especially in the hydrocarbons space.

WOR is in sound financial position and is expected to continue the positive earnings momentum into FY12.

The long-term relationships WOR has fostered with its blue-chip clients is likely to yield considerable benefits for the company, particularly as miners look to capitalize on rising commodity prices as well as the world’s shift to alternative energy sources.

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Mineral Deposits (ASX:MDL) is an exploration and development company, focussing primarily on the Grande Cote Minerals Sands Project in Senegal.

Grande Cote is a world class ore body that extends more than 100 kilometres and boasts high quality zircon and ilmenite.

Growing demand for mineral sands means production from Grande Cote is likely to occur in a period of rising prices, boding well for future profitability.

The market has acknowledged this, and as a result MDL has been one of the hot stocks in recent times.

Although capex costs at the project are expected to be significant, MDL’s cash balance and JV with Eramet puts it in a good position to meet funding requirements.

Magnificent Mineral Sands

The mineral sands industry is expected to boom in coming years due to a widening supply deficit.

Global zircon supply is forecast to shrink over the next decade, which will coincide with soaring demand from high growth countries such as China.

Zircon demand is driven predominantly by its use in ceramics. With China modernising its economy, the demand for ceramics, such as tiles, is expected to surge.

This is likely to drive significant zircon price growth, which will benefit MDL as it begins production in 2013.

The supply deficit will take time to narrow given the more than seven years required to bring projects from exploration to commissioning.

Titanium is anticipated to follow a similar path to zircon, in that demand is likely to be fuelled from its use in paint, plastics and paper – key ingredients for China’s growing economy.

Tizir is born

On 28 July the group formed a 50/50 JV with French-based miner, Eramet, known as Tizir Limited.

Under the JV, Mineral Deposits will contribute its 90% interest in Grande Cote (Senegal’s government owns the other 10%), with Eramet contributing its Tyssedal titanium and iron plant in Norway, along with $30 million in cash.

The JV was crucial for MDL as it secures off-take for the majority of Grande Cote’s ilmenite. The ilmenite will be used in the production of titanium feedstock at the Tyssedal plant.

The agreement also secures additional titanium supply for Tyssedal, giving it the capacity to meet growing demand from pigment producers.

Therefore it appears the JV is a win/win for both companies.

Grande Cote is grand

The Grande Cote project is strategically placed in Senegal, located not too far from the Dakar coast. This reduces the time it will take to transport the minerals from the mine separation plant to the port for shipment.

The lack of significant vegetation and overburden also allows for an efficient processing of the mined ore.

Thus when production begins MDL will be operating towards the lower end of its cost curve, giving it a significant competitive advantage.

Grande Cote has the potential to be a Tier 1 asset, with an operating mine life of 25+ years, and expected annual production of 85,000 tonnes of zircon and 575,000 tonnes of ilmenite.

These output estimates will amount to approximately 7% of global supply, putting MDL on track to become one of the world’s bigger producers.

Cash is king

MDL is in sound financial shape, having secured US$136.2 million in a capital raising in June. The raising brought the group’s cash balance at the end of June to US$173.3 million.

Moreover, the company has no external borrowings.

Although Grande Cote requires approximately US$516 million in capex requirements, Mineral Deposits’ array of financing options, including the contribution from Eramet, will help ensure sufficient funding for the project.

Outlook

Mineral sands producers stand to reap significant benefits from China’s voracious demand for resources.

The supply deficit is expected to linger for a while yet, putting MDL in line to achieve major price increases at the same time it begins production.

Grande Cote appears to be a long-life, low-cost asset for MDL, thus giving it a competitive advantage in the mineral sands industry.

Importantly, the company is in sound shape with cash in the bank, no external debt, and a JV with Eramet that has secured off-take for its ilmenite.

Therefore the future appears bright for MDL, and it will be one of the stocks to watch in coming months.

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Mesoblast (ASX:MSB) is a world leader in the development, manufacture and commercialisation of biologic products in the broad field of regenerative medicine.

MSB has the worldwide exclusive rights to a series of patents and technologies developed over more than 10 years relating to the identification, extraction, culture and uses of adult Mesenchymal Precursor Cells (MPCs).

MSB’s stock has been one of the hot stocks since the start of the year on market excitement over the therapeutic power of MPCs.

A unique business

The commercialisation of MPCs allows adult stem cells to be extracted from the bone marrow of donors, grown into therapeutic quantities and administered to non-related patients.

MSB’s lead products will target cardiovascular conditions, diabetes, inflammatory conditions of lungs and joints, eye diseases, bone marrow cancers, bone fractures, cartilage degeneration and musculoskeletal conditions.

The company aims to generate a series of high margin, off-the-shelf adult stem cell products that are obtained from a single donor, commercially expanded and frozen, and subsequently used in potentially thousands of unrelated, or allogeneic, recipients at the time and place of need.

Bone marrow approval

Mesoblast recently received approval from US authorities to begin an advanced trial of a treatment that could boost the number of bone marrow transplants for patients who cannot find a matched donor.

Following the approval, MSB has commenced the Phase III trial for bone marrow regeneration in patients with blood cancers.

MSB aims to produce a product that can be used in bone marrow transplants where a perfectly matched donor cannot be found.

Hearty hopes

Another key driver for MSB will be the results of its Phase II congestive heart failure trials in November.

Clinical results have thus far been encouraging, and if the full results turn out to be positive, MSB is likely to request a Phase III trial from the US Food and Drug Administration (FDA).

We believe a positive Phase II result will help deliver a significant jolt to MSB’s share price, as it moves the group closer to receiving regulatory approval to market its product.

Moreover, given the large number of reported heart problems in the US, Phase III approval can open up a huge market for MSB.

The Lonza and short of it

On 27 September, MSB announced an alliance with Swiss-based Lonza Group for the clinical and commercial production of its MPC product.

Under the deal, Lonza will supply MSB’s product requirements, in return for MSB having exclusive access to Lonza’s Cell Therapy facilities in Singapore.

The alliance is a critical plank in Mewsoblast’s strategy to market its product, as it creates certainty in the ability of the group to manufacture its MPCs.

Another interesting aspect of the alliance was Lonza using its intellectual property to help lower MSB’s manufacturing costs.

This would be in keeping with MSB’s aims to generate higher margin products, and would also provide it with the flexibility to develop new technologies.

Looking ahead

Whilst market excitement grows surrounding the therapeutic potential of MPCs, MSB has turned heads with its unique product innovation.

With regulatory approvals continuing to roll in and a global manufacturing alliance locked in, MSB is in a good position to bring its MPC technology to market.

The bone marrow product could be the company’s first revenue generating biologic therapy in the US and Europe.

MSB has huge revenue potential and exclusive rights to a series of patents and technologies relating to MPCs.

Furthermore, a successful outcome for MSB’s Phase II congestive heart failure trial could make MSB one of the stocks to watch in coming weeks.

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Northern Star Resources (ASX:NST) explores and develops mineral resources in the highly prospective Kimberley region.

NST is an emerging gold producer and explorer with a market capitalisation of around $180 million.

Its main project is the Paulsens gold mine which it purchased for $40 million.

The miner expects to release a resource upgrade later this month and a new mine plan for Paulsens this year.

NST recently acquired the 668,000 ounce (oz) Ashburton Gold Project which is close to the Paulsens mine.

Precious metal speed hump

We saw gold and silver futures slide recently as investors reacted to hikes in margin requirements for the contracts.

The CME Group raised margin requirements for both initial and existing positions in gold, copper and silver.

Margins are money investors must put up to be able to trade and hold futures contracts.

Gold lost more than US$100/oz on the announcement, printing a low of around US$1533/oz.

However, gold prices have since recovered from that low and are currently hanging at around US$1665/oz.

The fact of the matter is, the underlying fundamentals behind the gold price rally over the past year are still intact and we are likely to see gold continue to rise.

Ashburton acquisition

NST agreed to purchase the Ashburton Gold Project from Sipa Resources which will be paid for via a royalty on future production.

The deal includes 668,000oz resource and the Mt Olympus Gold Mine, which has previously produced 340,000oz.

This puts NST in a prime position to increase production rates, project life and create shareholder wealth through exploration.

Ashburton is a strategic asset for Northern Star Resources as it provides an immediate resource boost to the miner’s resource base.

High grade drilling results from Ashburton announced last week show NST is on track to grow production to 200,000ozpa.

Results

NST recently posted FY11 profit before tax of $20 million. This profit came after deducting $22 million for the acquisition of Paulsens gold mine and $24 million in depreciation and amortisation expenditure.

The result was aided by record production at Paulsens of 87,069oz at $588/oz cash cost.

NST has $30 million in cash on hand as at 27 September 2011 and is on track to exceed calendar 2011 forecast of $40 million surplus cash, 75,000oz production.

A resource upgrade is set for early 2012 with increases in mine life, production and cashflow expected.

The miner repaid the $40 million acquisition of Paulsens in just seven months.

Being unhedged, NST has maximum exposure to the strong gold prices and as a result it was one of the hot stocks over the course of 2011.

With strong cashflow and a robust balance sheet, NST is in a good position to grow.

Outlook

Gold is set to recover after recently suffering a setback from the CME’s decision to raise margin requirements.

NST’s strong financial position leaves it well placed for further acquisitions in line with its objective of building a major mining house.

With the potential for further acquisitions and strong gold prices backing the unhedged miner, we feel NST will be one of the stocks to watch in coming months.

Recent weakness presents an excellent opportunity for fresh entries.

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Coca-Cola Amatil (ASX:CCL) is an Australasian bottler for US-based The Coca Cola Company.

CCL manufactures, sells and distributes Coca-Cola products, including carbonated soft drinks, mineral waters and other non-alcoholic beverages, plus packaged fruit.

It is also considered among the market’s blue chip stocks.

Over the years, the company has successfully reduced its percentage of sugary carbonated beverages and increased its percentage of non-carbonated beverages, alcoholic beverages and food, in order to diversify its earnings stream.

It has also ventured into the manufacture and distribution of premium beer brands and the premium spirit portfolio of global distributor Maxxium through Pacific Beverages (a JV entity between CCA and SABMiller).

The company delivered a solid first half result last month helped by its strategic product positioning in key markets.

Market ace

CCL stands to benefit from SABMiller’s takeover of Foster’s Group. The move is likely to result in the Pacific Beverages joint venture being dissolved.

CCL management estimates it could book a profit of $200-$300 million on the $305-$380 million sale of Pacific Beverages to SABMiller.

From an EPS perspective, this would be equivalent to a 2%-3% accretion.

CCL will also have the opportunity to acquire some of Foster’s assets at multiples that would be EPS accretive to CCL.

As an overall entity, CCL has grown from strength to strength in recent years. The company’s diversification strategy has been key to this growth, which has included the addition of alcoholic beverages.

Drink up to earnings

CCL last month reported a 27.8% decline in 1H11 net profit to $153.6 million.  An interim dividend of 22 cents was declared.

The result was impacted by an $80.5 million charge related to the restructuring of its SPCA Ardmona division.

Underlying profit rose 5.5% to $234.1 million, with revenue growing 3.3% on-year despite the impact of the recent flooding and consumer caution.

At an AGM in June, CCL had said it was looking to target around 5% growth in underlying profit for the 1H11.

The group has been hurt by the strong Aussie dollar, natural disasters and higher resin prices.

Before currency translation effects, first half profit was expected to be around 6% – 7% higher than the prior year.

CCL was expecting to generate stronger earnings in the second half, but said trading conditions remained uncertain as consumers contended with higher living costs.

Taking into consideration the adverse factors CCL faced during the period, we feel the company delivered a solid result.

Looking ahead

CCL will continue to focus on capitalising on its growing alcoholic beverage and non-carbonated soft drinks market, which are growing owing to modern lifestyle trends.

The company has strong brand awareness, and very stable and highly predictable cashflow compared to its peers.

Coca-Cola Amatil is a defensive company which is protected against inflation as it can pass costs on to customers, who are always willing to spend money on CCL’s famous brands.

With the potential for significant earnings upside from the Foster’s takeover, we feel CCL is in a lucrative position.

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Sigma Pharmaceuticals (ASX:SIP) is a manufacturer and marketer of prescription, over-the-counter, and generic pharmaceutical products. It is also the owner of a leading full-line wholesale and distribution business to pharmacies.

Today SIP reported a 1H12 net profit of $26.7 million, which compares to a net loss of $9.2 million a year earlier.

SIP’s strong cash flow generation put a major dent in net interest expense, which was a key driver of the profit result.

EBIT jumped 55% on-year, helped by a 9% lift in underlying revenue.  The healthy sales result reflected market share gains.

An interim dividend of 1.5 cents was declared.  SIP said more would be done in the coming year to keep it ahead of industry changes.

SIP has been one of today’s best performers in the Australian share market.  It has also been one of the top stocks in recent months, having more than doubled in price since March.

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QR National (ASX:QRN) is Australia’s largest rail freight operator and the world’s largest rail transporter of coal from mine to port for export markets.

The group generated significant interest when it floated in November 2010, and it has since been one of the top stocks, having surged almost 30% to date.

Today, QRN announced that it signed a $900 million agreement to construct a rail link to the Wiggins Island coal export terminal.

The project would support an initial 27 million tonnes of coal per annum to the Wiggins Island terminal.

Construction is due to begin early next year, with expected completion by March 2015.

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Perseus Mining (ASX:PRU) is a gold explorer, focused on under-explored gold belts in West Africa.

The group’s Central Ashanti Gold Project has reserves of 3.3 million ounces (Moz) of gold, plus 1.5 Moz Measured and Indicated gold resources and 1.9 Moz Inferred gold resources.

A further 570,000 ounces of indicated gold resources and 1.21 Moz inferred gold resources are held on PRU’s West African projects, Grumesa and Tengrela.

The two projects (Central Ashanti Gold and Tengrela) aim to put out 670,000 oz per year once at full production, which would make PRU Australia’s second-largest listed miner by production after Newcrest Mining.

Further mineral resource and reserves upgrades are planned for later this year.

The miner recently completed its first gold pour during commissioning at the Central Ashanti Gold Project.

Though PRU is currently an explorer, the company is on track to become a producer.

PRU’s aim is to become a 400,000 ounce per annum gold producer from 2013, and the company is on target to achieve this following its consistent over-delivery on targets.

PRU is looking promising owing to its exposure to the under-explored gold belts in West Africa and on strength in gold prices.

Operational update

Following a recent updated economic analysis incorporating a revised life of mine plan (LOMP), PRU has planned throughput optimisation upgrades over the next 18 months.

Under the upgrade, average process throughput will increase from 5.5 Mtpa to 7.9 Mtpa.

Average annual gold production is set to increase by 38% to approximately 265,000oz.

Cash costs will drop to US$551/oz with a base case gold price of US$1,150/oz.

As a result, PRU’s EBITDA over the life of the project has increased by 127% to $1.56 billion.

The early start up of the Central Ashanti Gold Project could push the gold miner’s EBITDA up to US$300 million a year in 2013 and 2014.

Of course, the company will continue to lose money until it starts producing, although it has ample funding facilities to pursue its exploration activities and mine development plans.

Looking ahead

Perseus Mining is turning market heads over its consistent over-delivery on targets. The group is also in good financial stead, with approximately US$100 million cash.

Though PRU’s recent financial results are nothing to write home about, this is typical of a company in its emerging stages.

PRU is looking promising owing to its exposure to the under-explored gold belts in West Africa and on strength in gold prices.

The group will continue to expand its gold resources through rapid exploration of existing tenements and the acquisition of prospective new projects, while developing the Central Ashanti Gold Project.

Gold has gained significant ground this year, consistently reaching fresh record highs.

However, the precious metal saw a pullback late last week but is still in a good position to register further gains.

The metal printed highs of around US$1900 early last week and continues to hold its ground well above US$1800.

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