Mergers and acquisitions (M&A) also returned as a price driver with BHP’s complex offer to acquire South African-focused Anglo American likely to spark an increase in corporate activity across the resources sector.
Political events in the U.S. and Europe connect uranium and potash with the U.S. moving to ban the import of Russian uranium while Europe was warned that it was “sleepwalking” into a fertiliser crisis just as it did with overreliance on Russian gas.
“Fertiliser is the new gas” was the warning from the chief executive of one of the world’s biggest fertiliser makers.
Svein Tore Holsether from Norway’s Yara International said Europe’s heavy reliance on fertilisers from Russia could be followed by a ban on all Russian fertiliser which would benefit non-Russian producers.
Unfortunately, the wholesale collapse of the Australian potash sector over the last three years means there was little reaction locally to the European warning, though BC Minerals, which is developing the Mardie project in WA, added 1c to 24c.
Agrimin added 2c to 22c, but the rise was probably more to do with its exposure to a big indirect shareholding in the runaway niobium success story, WA1, which has rocketed up by 700% over the last 12-months and which this week put on another 63c to $18.32.
The bounce in uranium stocks follows a vote in the U.S. Senate which approved a ban on Russian metal. All that’s needed now to introduce the ban is the signature of President Biden.
The price of uranium rose by US$2.50 a pound over the week to US$92.25 a pound with local uranium stocks moving up strongly.
Boss Energy added 61c (13%) to $5.09, on track to reach the $6 target of Macquarie Bank. Paladin rose by 90c (6.5%) to $14.63 with Citi tipping a target price of $17. Deep Yellow put on 19c to $1.54 and Alligator Energy was up 1c (18%) at 6.3c.
Those price increases stood out against the weaker overall tone of the market which turned gloomy after U.S. central bank boss, Jay Powell, spooked by stronger than expected wages growth, warned that inflation was not falling at a rate which would encourage interest rate cuts.
“I don’t know how long it will take,” Powell told a news conference when asked when he might have confidence in inflation falling to the bank’s target rate of 2%.
Westpac Bank weighed into the interest rate debate with a comment yesterday that the first U.S. cut would not be made until September “at the earliest”.
The net result of those remarks a was fall in most major markets including Australia which lost all of a rise early in the week to end roughly where it started.
Copper and gold, the strongest of the commodities, for the past month, lost early momentum this week with copper starting to looked tired after a strong upward run from US$3.50 a pound at the start of the year to around US$4.57/lb today.
Sandfire became a lightning rod for the differing views about copper as its share price limped up by 0.5c to $9.27 even as some investment banks turned sour. Jarden sees Sandfire falling to $6.50 and Citi says sell with a price target of $7.90.
Smaller copper stocks were also caught in the “too far, too fast” mood shift by the banks as it slipped 2c lower to 26c and Macquarie told clients that the stock was a sell with a price target of 20c.
Morgan Stanley was this week’s biggest gold bull with a forecast that elevated political risk could keep the gold price up.
“Gold is hovering close to our base case of US$2350 an ounce but from here we see risk-reward more skewed towards the bull case of US$2760/oz than the bear case of US$2000/oz.
The gold price dropped on Wednesday to a one-month low of US$2280 an ounce before rising back to around US$2324/oz.
That roller coaster ride on commodity market had a confusing effect on share prices with Northern Star falling into a hole on Wednesday before bouncing back yesterday to trade around $14.85, down 19c over the week. Evolution was also down marginally with a 3c fall to $3.98 – despite Citi tipping a price rise to $4.50.
Smaller producers and explorers weakened. Talisman slipped 1c lower to 28c despite reporting strong copper and gold intercepts at its Durnings project in NSW. Alkane also shed 1c to 60c despite an upbeat scoping study on its Boda project which is also in NSW and a Bell Potter price tip of $1.25.
Capital raisings were led this week by Predictive Discovery which has received firm commitments for $50 million to fund its Bankan gold project in Guinea, and
- Turaco pulling in $18 million to help fund work on its Afema project in Ivory Coast.
- Hot Chili saying it was seeking $29.9 million for work on its copper assets in Chile, and
- Ioneer reported to be seeking $38 million for work on its Rhyolite Ridge project in the U.S.
Sun Silver rode the surge of interest in precious metals, closing its $13 million float early after an overwhelming response to its issue of 20c shares. The company has brought forward its listing date from June 5 to mid-May.
BHP’s bid for Anglo American is generating more political heat than market action as the South African government rushes to defend a local champion, and international investors edge towards accepting, especially if the terms are sweetened, as a way of quitting the troubled country.
On markets this week, Anglo shares rose by 8% in London while BHP lost another 2% and Rio Tinto, a potential rival in the game, was steady.
Lithium stocks continued their recovery, led by Azure which jumped 32c to $3.69 after the joint bidders for the company, Hancock Prospecting and Chile’s SQM, won foreign investment review board approval for their bid pitched at $3.70.
Pilbara Minerals was also the newsmaker of the week as it rose by 21c to $3.99 even as short sellers continued to try to drive the price down with a remarkable 21.9% of the company’s issued capital reported as being shorted.
Something’s going to break soon with Pilbara in what could become a costly game of tug-of-war.
Other lithium news and moves included IGO adding 43c to $7.59 after clearing out its surplus material in a bulk sale to its partner in the Greenbushes mine, China’s Tianqi.
Liontown gained 8.5c to $1.20 as commissioning continues at its Kathleen Valley lithium project in WA with Bell Potter trimming its $1.90 target price to $1.85, and Patriot Battery Metals slipped 1c lower to 75c despite reporting excellent assays from its CV5 project at Corvette in Canada including a 126.3 metre section grading 1.66% lithium.
Other news and market moves of interest this week included:
- Adriatic Metals rising by 21c to $4.59 as it attracts international interest in its Vares polymetallic project in Serbia. Morgans reckons the stock is heading up to $5.80.
- Redhawk Mining rising by 16c (24%) to 85c after announcing a robust pre-feasibility study on its Blacksmith iron ore project in WA.
- Mineral Resources rising by $5.96 to $73.13 as lithium prices show signs of firming and the company’s Onslow iron ore project progresses.
- Syrah Resources added 3c to 54c and could be on track to reach the 90c price tip from Macquarie as its graphite interests continue to expand, and
- Burgundy Diamonds slipped 1c lower to 17c, half the Bell Potter target price of 35c as the diamond market continued to soften.
