Bull or not, punters see ‘knicker-ology’ as a rewarding way to go

30th November 2018
Tim Treadgold

What’s the difference between a herd of cattle following a giant steer around a paddock and a flock of speculators investing in stocks close to promising copper discoveries? In two words: not much -- except it’s obvious that the cattle and speculators like to be near something big.

Unusual as it is to start a report on stock-market action with a farmyard anecdote, it is amusingly correct to equate the story of Knickers the steer and his adoring followers with small explorers claiming to be close to discoveries reportedly made by BHP and Rio Tinto.

Knickers, in case you missed it, is a giant Holstein Friesian steer that grew too big for his appointment at the local abattoir near his Myalup home south of Perth. Over the past seven years, Knickers has grown to stand 1.94 metres tall and weigh 1.4 tonnes.

Interesting as Knickers might be, its his herd of much smaller Wagyu steers who follow him around the paddock, attracted by his size, in a perfect example of animals applying the
“science” of nearology – or, if cattle could talk, they might say “if I’m close to Knickers, I’ll be safe”.

In the mining sector, there are several excellent examples of what might now be called “knicker-ology” with small companies clamouring to tell investors that they have a project close to either the Oak Dam West discovery of BHP in South Australia, or the Winu discovery of Rio Tinto in north-west of Newman in WA.

And it’s working.

In the case of Auroch Minerals, which has staked a claim at Lake Torrens roughly 50km from BHP’s discovery, its share price rose by 2c (33%) to 8c this week. In the case of Cohiba, which has claims to the west of Oak Dam, the share-price increase was 1.1c (110%) to 2.1c – before asking for a trading suspension ahead of an announcement.

Redbank Copper, up 1.9c (95%) to 3.9c, and Riversgold, up a more modest half-a-cent to 8.5c, were other examples of claiming to be close to BHP’s discovery, which appears to be world-class and potentially similar to the giant Olympic Dam copper and uranium mine with a best drill his of 425.7 metres at 3.04% copper and 0.59 grams of gold a tonne.

Antipa remains the best of the Rio Tinto followers, adding another half-a-cent this week to 3.4c, though it did touch a 12-month high of 4c on Wednesday and the latest price is 2.4c (240%) higher than a month ago.

Copper discovery news was the most positive aspect of a week deeply disturbed by trade war rumblings ahead of a meeting between the Presidents of China and the US at the G20 summit in Argentina.

 

Hopes are not high that there will be a resolution of the mutually-damaging trade stand-off but there have been hints of a cooling off in a dispute which is drying up demand for a range of minerals and metals, with iron ore one of the major victims as China’s steel industry slows.

Fortescue Metals, the leading pure-play iron ore stock, shrugged off the effect of a fall in the iron ore price, adding 7c to $4.05 thanks to the benefit of a project tour for analysts and news media and an expectation that heavy discounting of Fortescue’s low-grade ore is coming to an end.

Another dispute which requires a political solution is Malaysian Government pressure on the rare earths project of Lynas Corporation. Concern about the future of the company’s processing plant saw the stock drop another 12c this week to $2.08, taking its fall to 50c since mid-year.

Other news and market-moving events, up or down, in what felt like the first of the pre-Christmas flat weeks, included:

  • Jupiter Mines, the manganese miner led by former BHP boss, Brian Gilbertson, continued to slide away, hitting a post-float low of 28c, down 2c over the week and 19c (44%) from its float-day high of 43c last April.
  • Peel Mining resumed its rise after releasing another set of encouraging drill results from its Wagga Tank polymetallic discovery near Cobar in western NSW. Assays are pending but hand-held field XRF measurements showed zinc-rich massive sulphide mineralisation. On the market, Peel added 6c to 56c.
  • Adriatic Metals reported additional high-grade assays from its Rupice project in Bosnia including 46m at 12.7% zinc and 9.6% lead, good enough to lift the stock to a 12-month high of 76c on Wednesday before it eased to 69c for a 2c gain.
  • Neometals said it continued to make progress with its Barrambie titanium and vanadium project in WA, winning a glowing report from analysts at Euroz, a stockbroking firm, but shedding 2c to 24c on the market. Euroz reckons the Neometals could trade up to 50c over the next 12-months.
  • Orion Minerals said it has boosted the business case of its Prieska zinc project in South Africa with the discovery of what looks to be a satellite structure 5.3km from the main orebody which is the subject of a re-development feasibility study. On the market, Orion added 0.1c to 2.1c.
  • Bellevue Gold attracted the eye of Macquarie Bank which likes the look of the company’s namesake project in WA where a high-grade resource of more than a million ounces is emerging. The stock has been a strong performer but lost 4c to 44c this week despite Macquarie’s optimism and a price tip of 70c.
  • Spitfire Materials formally adopted its new name of Bardoc Gold and announced a fresh round of drilling at its namesake Bardoc project in WA. On the market, the stock added half-a-cent to 6.6c.
  • Anglo Australian Resources reported fresh assays from its Think Big gold project near Kalgoorlie in WA with a best hit of 28m at 2.43g/t starting at a depth of 35c, adding that the mineralisation was likely to be “highly economic and warranted early development.” The stock moved up by half-a-cent to 8.5c, and
  • Australian Vanadium increased the mineral resource at its Gabanintha vanadium project in WA to 183.6 million tonnes of material at 0.76% vanadium, helping lift the share price by half-a-cent to 3.4c.

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