The U.S. Presidential election will be the headline maker and trend setter for the future, but most Australians will be paying closer attention to the running of the Melbourne Cup, while Brits mark Guy Fawkes Day – all on November 5.
Donald Trump is finishing strongly in the election race with his possible win guaranteeing a wild year in ’25. British horse Buckaroo looks good in the other race, while Guy Fawkes will suffer his usual fate on a bonfire.
When those events are layered on wars in the Middle East and Ukraine and China’s struggle to kick-start its economy, it’s little wonder that gold hit a new all-time high of US$2789 (A$4256) an ounce on Wednesday.
Surprisingly, most local gold stocks struggled to make much headway, perhaps a sign that even gold bugs are squirreling away cash for whatever might happen next week.
Another surprise, largely because it had fallen so far over the past few months, was the strong performance of Mineral Resources after the timely $1.1 billion sale of its oil and gas assets to iron ore billionaire Gina Rinehart.
The much-needed cash injection eased pressure on Mineral Resources, triggering a $4.84 (14%) share price rise to $39.94 with RBC Capital Markets forecasting a continuing recovery, and price rise to a target of $63.
Saving Mineral Resources will boost overall investor confidence in the resources sector but there are ongoing pressures being caused by low commodity prices and rising costs, as highlighted in three of this week’s events.
The first was news that Pilbara Minerals has closed one of its production plants to reduce output in a tough market for lithium, followed by IGO announcing a slowdown in its lithium expansion project, and Lynas announcing cuts to rare earth production.
Problems in lithium and rare earths, the rescue of Mineral Resources, the suspense of the U.S. election and doubts about when Australia might start an interest rate cutting cycle weighed on investor sentiment leading to mixed result by key indices.
The best overall measure, the all-ordinaries index, had a solid mid-week but faded later to end down 1%. The minerals and metals index was flat, and the gold index, thanks to the failure of equities to follow the commodity price lost 3%.
Gold news this week was led by the release of the World Gold Council’s September quarter report which said the total value of gold sales in the quarter had topped US$100 billion for the first time thanks largely to private investor buying through exchange traded funds.
De Grey was the top explorer/developer with a rise of 7c to $1.53 after releasing the latest results from drilling at the Brolga deposit at the Hemi project in the north of WA.
Other gold news and moves included:
- Emerald shedding 11c to $4.19 despite reporting exploration success in Australia and Cambodia.
- Gold Road adding 2c to $2 though RBC reckons it will fall to $1.60 because of rising costs.
- Capricorn, down 8c to $6.31 after announcing an expansion of processing capacity at its Karlawinda project and a proposed $200 million capital raising. Barrenjoey and Bell Potter reckon the stock will rise to $7.50.
- Vault Minerals (formerly Red5) slipped 1c lower to 39c after reports that it was preparing to buy back its gold hedging book. CG Capital Markets sees the stock rising to 51c, and
- Andean Silver lost 4c to $1.42 despite reporting high-grade assays from drilling outside the resource envelope at its Cerro Bayo project in Chile with a best hit of 3.2 metres at 864 silver equivalent, including 1m at 1871g/t Ag/Eq – the equivalent to 60g/t of gold.
Battery metals, as indicated earlier, had a mixed week, led by the announcement from Pilbara that it was mothballing one of its plants which was initially well received with the stock rising by 25c to $3, but quickly turned sour with a fall back to $2.80 for a small overall rise.
Brokers generally liked the news from Pilbara despite a late sell-off with RBC forecasting a future price of $3.30, topped by an even more optimistic $3.70 from Jarden.
Liontown, which announced its first quarter of production from its Kathleen Valley project eased back by 2c to 84c, largely in line with a Citi price tip of 85c which was a 10c downgrade from the bank’s earlier forecast price of 95c.
Rare earth stocks were generally weaker with Lynas the exception thanks to a strong September quarter and largely steady revenue to $120.5 million which helped the stock rise by 17c to $7.66, shrugging off a Citi sell tip and downbeat price target of $5.50.
Firefly, which was up an eye-catching 24c to $1.29, was the pick of the copper stocks in a week when the price of the metal limped along at US$4.34 a pound with the lack of movement reflecting the overall uncertainty in equity and commodity market.
Develop, which said it was on track for cashflow from its redevelopment of the Woodlawn copper and zinc mine, also did well with a 27c rise to $2.64 while Sandfire slipped 37c lower to $10.28 and Aeris rose by 1c to 23c while Bell Potter forecast a target price for Aeris of 34c.
Iron ore stocks were mixed despite BHP reporting a positive outlook for the steel-making material.
Fortescue added 14c to $19.27 while Champion Iron slipped 5c lower to $5.90. Mineral Resources, as mentioned earlier, was up $4.84 to $39.86 thanks to its oil and gas sale.
BHP’s view of the iron ore market, which could be a pointer to a strong 2025, is that Chinese demand for steel might have faded in the property market but it’s been more than offset by demand in “green sector” consumption which includes electric vehicles, solar panels and wind turbine towers.
Paladin was the uranium sector news maker for the wrong reason, falling by $2.20 to $10.18 after reporting operational problems at its Langer Heinrich mine in Namibia. CG Capital Markets ignored the warning to stick with a buy tip and price target of $16.30 – a 20c trim of the previous price forecast of $16.50.
Piche Resources, a new player in the uranium game, reported encouraging assays from its Ashburton project in WA which delivered a 1.5c share price rise to 13c while Boss Energy slipped 14c lower to $3.47 just as Macquarie said it could rise to $4.60.
Other news and market moves of interest this week included:
- Talga, up 19c (45%) to 61c after reporting excellent progress at its Nunasvaara graphite project in Sweden.
- Syrah was another graphite stock riding high, adding 6c to 31c after reporting that it had secured a US$150 million loan from an arm of the U.S. Government for its Balama project in Mozambique. Jarden has a price target of 66c.
- Gold Hydrogen added 6c to 82c after confirming the presence of the rare gas Hydrogen-3 at its Ramsay project in South Australia.
- Burgundy Diamond Mines slipped 1c lower to 11c thanks to the weak outlook for diamond prices which encouraged industry leader De Beers to announce another round of production cutbacks.
- Nickel Mines, a rare success story in the downtrodden Australian nickel sector lost 5c to 91c following reports that Russia’s Nornickel is planning to boost production of all metals, including palladium, and nickel, and
- Signs of life in the new float department as Golden Horse Minerals is reported to be planning a $16 million initial public offering to fund work on gold projects in WA, and Burrendong Minerals is said to be seeking $5 million for its gold projects in NSW.
