Star performer was tiny Caspin Resources which rose by 3c (39%) to 11c after reporting high-grade assays from drilling at its Bygoo tin project in NSW.
Located near the historic Ardlethan mine which once dominated Australian tin production, Caspin said the latest drilling had returned a 20 metre section assaying a rich 2.11% tin per tonne from a depth of 107m.
While not a metal on every investor’s radar, tin has staged a remarkable comeback thanks to a combination of squeezed supply and strong demand in electronics where it has replaced lead as solder, sparking a 60% price rise over the last 12-months to US$54,000 a tonne.
Peregrine Gold was another outlier with its 55% rise to 17c before slipping into a trading halt ahead of an announcement expected today (Friday) which could throw more light on its gold exploration project near BHP’s big Newman iron ore project in WA.
Queensland copper explorer Hammer Metals also moved higher after receiving an unsolicited takeover offer from Austral Resources. The 8.7c Austral bid tops an earlier 6.7c offer from Larvotto Resources.
Bidding duels in the small to medium end of the market are a sign of increasing sector consolidation as miners seek to pool resources and rein in their costs.
OD6 was another winner but only briefly, rising by 1c to 15c after reporting encouraging fluorspar assays from its Quin project in Nevada before slipping back to where it started at 14c. The stock has been performing strongly since March when it was trading as low as 7c.
Upward moves such as those mentioned were rare in a week dominated by national and international events which continue to weigh heavily on investor confidence, especially the prospect of a “forever” war in the Middle East.
At the national level, Australia copped a caning from the organisation for Economic Co-operation and Development which warned that low growth and high taxes have delivered a steep fall in living standards.
Advisory firm Deloitte Access Economics added to the OECD alert with a research note which said Australia was facing its longest stretch of weak growth since the recession of the early 1990s.
The net result of a poor domestic outlook and an ongoing war in the Gulf was a week when the Australian stock market struggled to make headway with the all ordinaries index slipping 1.5% lower, the broad metals index lost 4.5% while the gold index managed a 2% increase.
That upward move in the gold sector in a week when the price of the metal fell by 1% is an example of investors seeking a safe haven as well as positioning for the next round of corporate action which seems likely to follow the current major events, the bidding duel for Vault Minerals and a battle for control of Northern Star.
Regis Resources started the Vault bidding with a cash/shares offer valued at $4.61 only to be topped by Genesis Minerals with a rival cash/share offer valued at $5.74. Vault has till Monday to lift its offer but the common view is that Genesis will win because it has greater operational synergies with Vault.
Success with its Vault bid will add to the reputation of Genesis as the fastest growing Australian gold producer with ambitions that go well beyond its current ranking of third in the gold pecking order – assuming it acquires Vault.
Leading investment bank UBS has become a Genesis fan, topping share price tips for the stock at $10.05, up $4.58 (83%) on last sales of $5.47.
UBS told clients in a mid-week gold sector research note that the merger and acquisition (M&A) cycle will continue into the July/August “guidance” season.
“We expect M&A to continue with the recent gold price softness and cost inflation skewing risks to the downside for earnings in the 2027 financial year,” the bank said.
Significantly, of 18 gold stocks assessed by UBS, 17 are rated as buys with one (Evolution) a hold. There are no sells.
Other than Genesis, the widest gaps between the market and UBS price forecasts are Capricorn with last sales at $13.07 versus a bank target of $17. Catalyst, $5.64 v $9. Westgold, $4.62 v $8.25. Greatland, $10.84 v $15.85, and Bellevue, $1.28 v $1.80.
Most gold (and silver) stocks slipped lower over the week, led by:
- Northern Star, down $2.08 (9%) to $19.88, a fall which will play into the hands of U.S. corporate raider Elliott Management which is demanding a dramatic overhaul of Australia’s biggest gold producer.
- Silver Mines, down 1c to 13c despite a positive research report from the stockbroking firm Morgans which sees a future share price of 40c as the company’s Bowdens silver project in NSW is revalued.
- Minerals 260, down 19c to 59c despite releasing an upbeat pre-feasibility study into its Bullabulling gold project in WA followed by an increase in the share price forecast by Bell Potter from $1.35 to $1.60.
- Andean Silver, down 27c to $1.92 despite reporting the highest ever grades from drilling at its Cerro Bayo in Chile, and
- West African Resources, down 23c at $2.64 despite reporting stronger than expected June quarter production of 125,179 ounces.
Lithium stocks weakened after a warning from ANZ Bank that supply from reopened mines in Australia and Africa is swamping demand with the bank tipping a 100,000 tonne surplus of the battery-making material this year and for the price of lithium carbonate to drop from its current US$21,000 a tonne to US$16,000/t.
Most lithium stocks lost ground over the week. PLS fell by 55c to $4.68, Liontown was down 28c to $1.47 and Wildcat was 8c weaker at 45c even as Shaw and Partners tipped a rise to $1.60.
Rare earth stocks also suffered in the sell-off led by Lynas which was sold down by a hefty $1.48 to $16.83 despite signing a deal with a South Korean magnet maker and a Morgan Stanley by tip which included a price target of $20.45.
Other rare earth news and moves included Meteoric Resources, down 1c to 17c in spite of a 246% increase in the resource at its Caldeira project in Brazil, and Australian Rare Earths, down 1c to 11c despite reporting the discovery of a niobium bearing system at its Koppamurra rare earth project in South Australia.
Other news and moves (all down) included:
- Cobre, which reported first positive cash flow from its Sierra Atacama copper mine in Chile only to fall by 7c to 30c.
- Marimaca Copper lost 66c to $7.74 despite reporting high grade copper from the latest drilling at the Pampa Medina target in Chile with a best hit of 6 metres at 6.11% copper.
- Fortescue weakened with the iron ore price, down 36c at $18.29 as did recently listed Killi which fell by 3c to 18c, and
- Emerging Swedish based graphite producer Talga fell by 4c to 25c after signing a sales deal with Japan’s Mitsubishi.
