Copper is BHP’s winner, with the metal rising by 3% this week to US$5.96 a pound, a key to BHP’s 9% rise $58.19, helping the overall Australian stock market reach a record high.
Citi, an investment bank, reckons copper will keep rising over the next few months to peak at US$6.40/lb while averaging US$5.90/lb over the next 12-months.
Lithium also performed strongly this week, rising by 6% to take its increase over the last 12 months to 110%. Winners included Pilbara Minerals, up 20% to $5.23, and Liontown, up 8% to $1.87, even as a big shareholder announced its exit.
Rare earth stocks joined the tech-metals rally thanks to China banning the export to Japan of essential metals used in a wide variety of technologies. Lynas was the primary local beneficiary, up 9% over the week to $16.99.
Gold wasn’t far behind in what’s been a strong week for the resources sector with the threat of a new Middle East war boosting the appeal of safe haven assets.
The next few days could be critical for all financial markets as the risk of a sharp correction grows and seasoned bankers claim they can see parallels in today’s market with the period before the 2008 global financial crisis (GFC).
Jamie Dimon, chief executive of JPMorgan Chase, led the warning after a private credit specialist called Blue Owl blocked client redemptions, an echo of action taken by Bear Stearns in 2007 – an event which is now seen as the starting point of the GFC.
Volatility and potential bankruptcies in the software sector caused by the rapid increase in the use of AI for coding is a second warning of trouble ahead.
Australian investors with exposure to technology driven stocks such as WiseTech Global (down 50% over the past 12-months) and U.S. listed Atlassian (down 74%) are feeling the AI heat.
The rise of gold as a hedge against inflation and bad government appears likely to continue with a move back towards last month’s all-time high of US$5400/oz a near certainty if the U.S. delivers on a threat to bomb Iran.
Minerals 260 was one of the gold stars this week, rising by 25c (59%) to 67c after announcing a $220 million funding deal with U.S. gold major Franco Nevada to accelerate development of the Bullabulling project in WA.
Other gold moves included:
- Greatland Resources, up 73c to $13.53 after saying it would soon release a maiden resource for the West Dome Underground mine at its Telfer project in WA. Citi said it is sticking with a price target for the stock of $16.
- Hamelin Gold rose by 7.5c to 19c after announcing plans to start drilling at its Day Dawn project close to the Telfer mine of Greatland.
- Besra Gold rose by 5c to 13c after announcing that its lease on the Bau gold project in Malaysia had been conditionally approved.
- Emerald Resources rose by 70c to $7.06 after reporting a strong December half profit with CG Capital Markets tipping another move up to a target price of $7.35.
- PC Gold rose by 14c to 95c after reporting high grade assays from drilling at the Macau prospect in the historically rich Pine Creek project in the Northern Territory.
- Boab Metals rose by 2.6c to 66c after releasing an update on construction work at its Sorby Hills silver and lead project in WA.
- Alkane added 2c to $1.70 after reporting a deep-seated gold-bearing structure under its Tomingley mine in NSW with assays result that included 3m at 2.78g/t.
- Alicanto Minerals added 49c to $2.30 thanks to growing interest in its Mt Henry gold project in WA, and
- Horizon Gold rose by 18c to $1.36 after reporting high grade gold assays from the latest drilling at its Kingfisher project in WA including 4m at 11.35g/t.
Lithium stocks, as mentioned earlier, performed well over the week thanks to the price of lithium carbonate in China rising by 11% to US$23,321 a tonne and an upbeat report from UBS and its China lithium analyst Sky Han.
Han’s comments focused on demand for the battery metal after the end of the Chinese New Year shutdown with electric vehicle sales tipped to rise sharply along with demand for battery electricity storage.
Spodumene inventories in China were said to have fallen to less than one month’s demand and lithium chemical inventories at converters are down to two weeks’ use which indicate ongoing price strength.
Apart from the rises posted by PLS and Liontown, lithium moves included Galan, up 4.5c to 41c, Wildcat, up 5c to 48c, Elevra (formerly Sayona), up 81c to $8.52, and Core, up 5.7c to 26c after announcing the sale of its spodumene stockpile at the Finniss project in the NT.
Rare earths, led by Lynas, had a solid week as China banned exports to Japan and leading investment bank Morgan Stanley reported growing tightness in the market for NdPr (neodymium and praseodymium), the most widely used metal alloy in permanent magnets.
The latest price of US$110/kilogram for NdPr is more than double the US$53/kg of 12 months ago and matches the price offered by the U.S. Government as it tries to encourage local production.
Other share price movers by rare earth stocks included Brazilian Rare Earths, up 79c to $5.15. Hastings, up 2.5c to 53c and Arafura, up 1.5c to 24c.
Headwinds which have been expected to blow through the iron ore sector are yet to appear with Fortescue reporting a strong 23% increase in net profit for the December half and a matching increase in the interim dividend.
The net result was a 53c share price rise by Fortescue to $20.85 and a price forecast from Barrenjoey of $22.50.
Small fry Fenix did less well this week with a modest fall of 1c to 42c offset by an optimistic report from Bell Potter which reckons the stocks will rise to 67c.
Other news and market moves include:
- Anax Metals, up 0.7c to 3.3c after releasing an updated definitive feasibility study into its Whim Creek copper project in WA.
- Sky Metals slipping 1c lower to 17c despite reporting that its Tallebung tin project is funded to a final investment decision. Bell Potter upgraded its price tip on Sky from 21c to 30c, and
- Viking Mines rising by 0.3c to 1.5c releasing historic, high-grade tungsten assays from the Linka project in the U.S., including 12.2m at 1.3% wolfram (an ore of tungsten).
