Old-fashioned metals back in vogue in a strong week for most miners
18th August 2017
Everything old was new again on the Australian stock market this week as technology and battery metals were joined (and overtaken in some cases) by the traditional players in the mining game - copper, zinc, aluminium and gold.
Zinc, which has been a star-in-waiting for the past two years as stockpiles have fallen and demand risen, finally delivered with a rush up to a 10-year price high of $US1.41 a pound, a level which is 120% more than at the start of last year.
Biggest beneficiary of the zinc stampede is the world’s biggest producer, London-listed Glencore, which has risen by a spectacular 375% from a lowly 75-pence in mid-January last year to trade overnight at around £3.45.
On the Australian market, there are far fewer zinc exposed stocks than there were a few years ago but beneficiaries of the recent rise in the price of the metal include New Century Zinc, the company planning to re-start operations at the mothballed Century mine in Queensland. It added 7c yesterday (12.5%) to 89c, its highest since listing last month.
Other locally-listed zinc stocks to do well included Red River, which added 2c to 24.5c after announcing solid progress in re-starting the Thalanga project in Queensland. Ironbark Zinc, which is exploring in Greenland, added 1.2c (14%) yesterday to trade at 9.7c. Metalicity, rose by 0.3 of a cent (8%) to 4c and Heron, which is redeveloping the Woodlawn zinc and copper mine in NSW, also gained 0.3 of a cent (4%) to 8.8c.
Most other stocks exposed to base metals and gold enjoyed strong investor support as international funds were rotated into metals consumed in industrial production processes, a direct response to indications of continued improvement in the global economy 10 years after the start of the global financial crisis.
Sandfire Resources led copper stocks higher with a rise of 21c (3.8%) yesterday to $5.75 thanks to the price of copper rising to within striking distance of $US3/lb and as investors digested news that the company’s Black Butte copper project in the US is developing traction.
Gold was also a winner during the week, moving closer to $US1300 an ounce with the Australian price sitting comfortable back above $A1620/oz.
Evolution Mining was the most significant gold winner yesterday, adding 11c (4.9%) to $2.37 thanks to the gold price and a strong annual profit of $217.6 million, a final fully-franked dividend of 3c a share and a promise to payout 50% of after-tax earnings as dividends.
But the winner of the title of best performance of the week went to one of the mining and engineering service providers, NRW Holdings, which reported a 33% profit rise, an expanding order book and a $25 million capital raising priced at 68c a share – which was very good news for the participants in the raising as NRW’s share rose by 26c (40%) to 92c.
Other price-moving and news events included:
- Artemis Resources adding 8c to 22c as interest grows in the potentially significant Purdy’s Reward gold discovery in the Pilbara with Canadian partner, Novo Resources. Encouraging samples of gold nuggets found at site have excited speculators but whether the discovery has similarities to South Africa’s giant Witwatersrand gold province will need extensive testing.
- Calidus Resources also made headlines for what looks like its own promising discovery in the Pilbara. Best assays from drilling at the Warrawoona project included 6 metres at 63.31 grams of gold per tonne from a depth of 49m. On the market, the stock added 1.1c (50%) to 3.3c.
- Decmil joined NRW as an engineering and mine services winner with an 8c share price rise to 96c after announcing a contract with BHP at its emerging flagship iron ore project in WA, South Flank.
- Mt Gibson was the best of the iron ore stocks with a rise of 3c to 45c after reporting a solid profit of $36.5 million from ongoing operations and work on redeveloping its high-grade Koolan Island mine.
- Echo Resources added 1c to 11.5c after reporting encouraging gold assays from close to the mothballed Bronzewing mine in WA. Best intersection at the Zaphod zone, about 10km from Bronzewing, included 2m at 15.5g/t from a depth of 105m.
- Argosy Minerals had a strong week after signing an offtake deal for lithium to be produced from its Rincom project in Argentina, rising by 2.5c to 10.2c.
- Danakali, one of the emerging potash producers, earned a fresh buy tip from Bell Potter, a stockbroking firm, with the stock tipped to reach $1.10 in the next 12-months, well above latest trades at 67c.
- Global Geoscience added 3c to 22.5c after reporting high-grade lithium and boron grades at its Rhyolite Ridge project in the US State of Nevada. Best intersection from drilling was 17m at 2153 parts per million lithium and 1.18% boron.
- Lucapa added 1c to 27c after reporting the recovery of more large diamonds from its Lulo project with the best being an 83 carat gem, and
- Encounter Resources reported gold grades up to 29g/t from a 4m intersection at its East Thomson’s project near the Telfer gold mine in WA.
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