Good news, and there was a bit about, included another high-priced sale of upgraded lithium ore (spodumene) by Pilbara Minerals, and fresh encouragement from the latest drilling at the Julimar nickel and palladium discovery of Chalice Mining.

Energy metals were the stars of the week, aided by the Pilbara spodumene sale at a handsomely profitable US$7830 a tonne, and news from the U.S. that three Aussie companies had been allocated a slice of the Biden administration’s A$4.5 billion (US$2.8 billion) in hand-outs for work on energy and critical minerals.

Brisbane-based Novonix is getting $240 million to spend on its synthetic graphite plant in the U.S. On the ASX the stock added 50c (27%) this week to trade at $2.32.

Melbourne-based Syrah was allocated $350 million to expand its U.S. natural graphite plant, helping the company shake off the effects of trouble at its Mozambique mine and for the stock to rise by 19c (11%) to $2.07.

Piedmont Lithium rose by 6.5c (8%) to 90c after announcing the receipt of a $141.7 million grant for work at its Tennessee lithium project.

Other energy metal news included:

  • Macquarie Bank discounting reports of lithium stockpiling in China and maintaining buy recommendations on all the stocks it researches in that sector with Pilbara set a new price target of $5.70 after its 9c slide this week to $4.91 and Liontown said to be on its way to $2.50 after this week’s rise of 25c to $1.83.
  • Azure rose by 4.7c (21%) to 27c after reporting high grade lithium assays from rock chip samples collected at its Andover project in WA’s Pilbara region, and
  • Prospect Resources added 0.5c to 10c after reporting encouraging assays from first pass drilling at its Step Aside project in Zimbabwe with a best lithium hit of 1.28% over 7.4 metres from a depth of 43.6m

Corporate activity also stirred in the background with hints of investment funds building their positions on the share register of IGO Ltd after the death of its chief executive, Peter Bradford, and suggestions of Chalice looking for a partner to help develop Julimar with South African platinum specialist Anglo American said to be the front runner.

The bad news was topped by the latest inflation reports from in the U.S. and Europe which has all but guaranteed another 0.75% increase next month in official U.S. interest rates and perhaps a full 100 point (1%) hike.

The most alarming aspect of surging prices in the U.S. is a belief, reported in the New York Times, that “inflation is starting to feed on itself”, leaving the Federal Reserve with little choice but to maintain an aggressive rate increasing policy.

On the corporate debt market, Air New Zealand set a new benchmark for high-quality bonds with a raising of NZ$100 million at 6.61%, double what it might have paid a year ago while in the U.S. the 30-year fixed mortgage rate for home owners rose to 7.2%.

French asset manager BHP Paribas cautioned that markets are “under-estimating how high the Federal Reserve will take rates”. The bank expects inflation to stay around 10% this year before falling to 3.6% next year.

Events in China and Russia were the other confidence drags this week, China because of its economy-damaging Covid Zero policy, which could dampen demand for imported commodities, and Russia because its war in Ukraine is driving Europe into a severe recession, or worse.

Capping the gloomy international outlook is a political crisis in Britain which could see newly-elected Prime Minister Liz Truss booted out by her own Conservative Party after a month in the job (welcome to Britaly?) which will open the door even wider for a Labor Government, perhaps sooner than later with newspaper cartoons showing No.10 Downing Street refitted with a revolving front door.

Overall, the ASX fell by 0.5% this week while the mining sector fell by 2.2% and the gold index dropped by a hefty 4.7% thanks to the gold price losing US$20 an ounce to US$1624/oz, a two year low.

Gold stocks were a mixed bag but generally weaker, led by another poor showing from St Barbara, which kicked off the September quarter reporting season with news that its flagship Gwalia mine could only manage to produce 34,078 ounces, down 35% on the 50,506oz in the June quarter.

St Barbara was punished for the poor result, falling by 28c (37%) to 47c while blaming the result on an industry-wide skills shortage. The latest fall means St Barbara has plunged by $1.06 (69%) over the past 12-months.

Evolution was another gold leader whacked by investors after a soft quarter of reduced output and higher costs which saw the stock plunge to a six-year share price low of $1.84, down 5.5c for the week.

Perseus was a rare gold producer to swim against the outgoing tide thanks to record September quarter gold production of 137,460oz at US$879/oz, good enough for the stock to add 5c to $1.63.

Northern Star reported a weak quarterly output of 369,000oz to be duly marked down by 14c to $7.93 but Shaw stockbrokers is sticking with a buy tip and price target of $12.80.

Iron ore managed a small price rise of US$1 a tonne for high grade material to US$94.5/t while low grade (58%) ore slipped US$1/t lower to US$85/t, weighing on the local pure play leader Fortescue Metals, which lost 48c to $16.63.

Most investment banks are tipping a lower share price for FMG next year, led by Goldman Sachs which sent analysts on a tour of the company’s operations only for them to come back with a sell recommendation and target price of $13.40.

Other news and market moves this week included:

  • Peak Rare Earths rose by 11c (29%) to 51c after announcing an offtake and strategic cooperation agreement with China’s Shenghe Resources covering the Ngualla rare earths project in Tanzania.
  • Southern Palladium reported encouraging results from drilling at its Bengwenyama project in South Africa with three completed drill holes hitting the prolific UG2 platinum and palladium reef. On the market, the stock added 5.5c to close at $1.
  • Taruga Minerals added 0.5c to 3.5c after reporting high grade results from drilling at its Morgan Creek rare earth project in South Australia with a best hit of 43m at 0.17% total rare earth oxides from the surface with higher grades in sections.
  • Whitehaven Coal was up early down later to end the week with a fall of 74c at $10.09 as flooding in eastern Australia keeps the thermal coal price at an elevated US$391 a tonne. Shaw stockbrokers see Whitehaven bouncing back to $15.
  • Sandfire Resources was marked down by 38c to $3.35 despite a solid September quarter of production that included 28,056 tonnes of copper and upgraded guidance to an annual copper target of between 83,000t and 91,000t.
  • Pantoro led a busy fund raising week with the launch of a $30 million share issue priced at 14.5c compared with a market price of 17c.
  • Two junior miners, De Soto and Toubani were reported to be looking for up to $12 and $6.5 million respectively for work on their lithium assets in the Northern Territory (De Soto) and West African gold (Toubani), and
  • Askari Metals added 8c to 48c after signing a strategic cooperation agreement with a Chinese company for the development of the Barrow Creek and Eastern Pilbara lithium projects.