Copper stars in a wild week on financial markets

More can be expected from copper as decision-day looms for the proposed mega-merger of copper-focused Rio Tinto and Glencore, and discovery and development news sparks interest in smaller copper companies.

Price pressure is also likely to build as a global copper shortage develops. The Chilean Government’s Copper Commission (Cochilco) predicted a global production shortfall of 238,000 tonnes this year.

That Cochilco forecast dovetails with an optimistic research note from leading investment bank Citi that the copper price could surge from its current US$5.93 a pound (down 3% over the week) to as high as US$7.25/lb later this year.

The Rio Tinto/Glencore deal, which could create a US$300 billion copper and iron ore giant, will reach a milestone late on Friday when Rio Tinto, under London stock exchange rules, must make a formal offer to acquire Glencore, or seek a time extension, or walk away.

At the other end of the spectrum, two small copper-exposed stocks were among this week’s best performers.

Solstice Minerals rose by 44c (70%) to $1.09 after reporting wide and high-grade copper assays from drilling at its Nanadie project south of Meekatharra in WA’s Murchison region including 62 metres at 1.55% copper and 66 grams a tonne of gold from a depth of 256m.

The geological setting is said to be different but the Solstice discovery, from the first five holes in a 23-hole drilling campaign, is reminiscent of the 2009 DeGrussa copper by Sandfire Resources to the north of Meekatharra.

Orion Minerals, which has spent the past decade battling to develop the historic Prieska copper mine in the north-west of South Africa, rose by 0.2c to 3.5c, taking its rise over the past two weeks to 1.6c (80%).

Driving Orion is the imminent closure of a major funding deal and copper offtake agreement with Glencore, growing confidence in the company’s new management team, and the company’s inclusion in an exploration funding deal with BHP.

Other copper news and share price moves, up and down, this week included:

• Cannindah Resources edging up by 0.3c to 5.3c after raising $15 million for work on its namesake project in Queensland, including $2 million from discerning resource funding specialist Lion Selection with another $2 million expected from a share purchase plan.

• AIC Mines slipping 1c lower to 63c despite reporting positive mine development news at its Jericho project in Queensland. Shaw and Partners has an 80c price target on the stock, and

• Aeris Resources, losing 7.5c to 62c despite reporting strong December quarter production which earned the company an upgraded price for tip from Morgans which lifted a 60c target to 70c.

Unimpressive as those copper stock moves might look, they are better than most gold companies where a case of the jitters saw fund managers trimming exposure after the US$1000 an ounce price plunge to US$4509/oz on Monday before a recovery kicked in taking gold back to US$4878/oz.

The relative strength of copper also stands out against the technology sector which has seen  leaders such as Microsoft and Meta fall by more than 10% and crypto leaders such as Bitcoin fall by 25% over the past month and 42% over the past six months.

The crypto collapse and fresh fears about the damaging effects of artificial intelligence (AI) on the broader economy could be infecting all markets.

In crypto alone, according to the Bloomberg news services, investors have been forced to cover losses which have topped US$500 million (half a trillion dollars), a pasting which could trigger a fire sale of quality assets to meet margin calls.

Political unrest in the U.S. and the threat of a new Middle East war which would drive oil prices higher also weighed on investor sentiment.

Local gold stocks were hit hard early in the week as the international gold price fall sparked a mini-exodus from leaders such as Northern Star which at one stage was down 10% at $26.60 before recovering to $27.13, a fall over the week of $1.25.

Morgans, in a major review of gold stocks, expects Northern Star to rise to an all-time high of $33 as problems with its Kalgoorlie flagship mine are resolved.

Other gold (and silver) sector news and share price moves included:

• Regis Resources, down 38c to $7.92 despite unveiling plans for a fresh attempt to develop the McPhillamys project in NSW which was controversially blocked last year under Aboriginal heritage laws.

• West Coast Silver, down 2c to 22c despite reporting bonanza grade drilling results from its Elizabeth Hill project in WA with a best hit of 27.4m at 1314g/t of silver, including a thin sector (0.35m) at 33,107g/t (1064 ounces per tonne).

• Ausgold, down 16c to $1.07 despite ongoing progress at its Katanning gold project in WA.

• Pantoro Gold, down 63c to $4.67 despite a fresh buy recommendation from Morgans which likes the company’s unhedged gold production from its Norseman project in WA, setting a price target for the stock of $6.04, and

• Catalyst Metals, down $1.39 to $7.71, roughly half of Morgans price target of $14.56, and a fraction of the $18.90 price target from Argonaut.

Rare earth stocks were expected to perform better than they did this week thanks to a proposal of the U.S. Senate to inject US$70 billion into a critical metals fund as defence against China’s weaponisation of critical materials.

But that proposal failed to save Lynas Rare Earths from falling by 45c to $14.89, Iluka losing 77c to $5.08 and Hastings easing by 4c to 51c.

Lithium stocks, despite new-found interest from investors, ran out of puff perhaps because they had run too far, too fast.

PLS Group, formerly Pilbara Minerals, closed 44c weaker at $4.14 despite a buy tip and price target of $5.50 from Barrenjoey. The stock was also well ahead of the gloomy price tip of $2.50 from Jarden.

PMET, formerly Patriot Battery Metals, lost 5.5c to 66c despite reporting high and wide caesium assays from the latest drilling at its Canadian project.

Fortescue was the best of the iron ore stocks but still lost ground, down 16c at $21.248 and a rare example of a miner making progress over the week thanks to a weakening iron ore price. Other iron ore stocks were sold off in the downturn. Mineral Resources lost a hefty $8.67 to $54.08, and Fenix was down 5.5c to 40c.

If there was a highlight of the week it was in the continued support by investors for resource sector capital raisings, a positive pointer to punters seeing through the short-term sell-off and the long-term appeal of hard commodities at a time of rising inflation.

Big capital raisings completed this week included: Brightstar pulling in $180 million to fund its Sandstone project in WA. Bellavista raising $35 million to help fund its acquisition of the Pickle Crow project in Canada. Hot Chili attracting $40 million for copper exploration in Chile, and Strickland raising $55 million for its Rogozna gold project in Serbia.

Other news and market moves in a messy week included:

• Tivan, up 3c to 41c after reporting and upgraded mineral resource estimate for its Speewah fluorite project in the north of WA.

• Everest Metals down 1c to 17c despite reporting fresh high-grade rubidium assays from its Mt Edon project in WA.

• Elementos, down 2c to 39c after reporting an expanded tungsten resources at its Cleveland tin project in Tasmania, and

• Galileo Mining down 5c to 25c despite reporting encouraging platinum assays from the latest drilling at its Norseman project in WA with a best result of 8m at 1.33g/t of 3E (platinum, palladium, and gold).