Star of the show was Petratherm, a stock which once made headlines as a geothermal (hot water) energy explorer, but stormed back on Wednesday with a high-grade rare earth discovery which lifted the company’s share price up by 12c (225%) to 17c, before easing to 15c for a 10c gain over three days.

The near-surface, clay-hosted rare earth find in the northern Gawler Craton of South Australia included readings as high as 2819 parts per million (0.28%) total rare earth oxides over 3 metres from a depth of 15m but the most significant aspect of the discovery is that it could spark a pegging rush.

Hastings Technology Metals also attracted attention in the rare earth sector thanks to an upbeat report from Macquarie Bank which reckons Hastings will be Australia’s next rare earth producer thanks to the high levels of neodymium and praseodymium in its Yangibana orebody in WA. Macquarie sees the stock rising from its current 28c to 40c.

Another rare earth development of interest was a report that VHM, a new float back by Mineral Resources boss, Chris Ellison, is close to launching its $320 million prospectus with the help of Standard Chartered Bank and Canaccord Genuity.

Allkem was the best of the lithium stocks, adding 37c to $13.26 after releasing an unsurprising third quarter production report at the start of what will quickly become a flood of paper next week. The stock was also one several to have widened a “value gap” between the market price and what well-informed investment banks are tipping.

Credit Suisse, for example, reckons Allkem is heading for a price of $16.40, up 23.6% on last sales. Citi says $16, while Morgans pushes the boat out as far as $16.98, and while they might all be wrong, the price tips are an interesting measure of banker confidence in the lithium sector.

Other noteworthy price moves this week, and significant value gaps between the market price and bank forecasts, included:

  • Midas Minerals adding 6c to 34c but with trades as high as 46c on Wednesday (up 64%) which was good enough to earn a speeding inquiry from stock exchange regulators, which the company explained by referring to a deal to buy a portfolio of gold and lithium prospects in WA.
  • Larvotto Resources adding 8.5c to 36c (31%), a rise which also earned a speeding inquiry which the company explained by crediting a story written by Barry Fitzgerald for his Livewire website earlier this month about the Larvotto’s exploration portfolio.
  • Boab Metals rising by 3c to 47c after releasing an upbeat March quarter activities report covering its Sorby Hills silver/lead project in WA’s Kimberley region. Shaw and Partners reckon the stock will more than double on its way to a target price of $1.08.
  • Strandline continuing to receive positive reports as it moves ahead with its Coburn mineral sands mine in WA and projects in Tanzania with the company’s share price up 1.5c to 47c this week while Morgans sees it rising to 70c, and
  • Whitehaven Coal continuing its powerful run thanks to high prices for coal in Asia with the company’s chief executive Paul Flynn saying the “blistering coal rally” should continue into next year. On the market, Whitehaven added 23c to $4.74 with Shaw and Partners tipping a price of $6.25.

Overall, the Australian market rose by 1.8% this week with the all-ordinaries index bumping against its all-time high thanks in part to the high-priced takeover bid for Ramsay Healthcare which offset continued overseas as U.S. market eased and the Ukraine war dragged on Europe.

Locally, the two biggest mining companies, BHP and Rio Tinto, were marked down after reporting weak March quarter reports. BHP slipped 77c lower to $50.96 while Rio Tinto was down $3.44 to $115.85.

The falls raised the questions as to whether the two leaders had become buying opportunities as the outlook for commodities remains exceptionally strong, a view shared by analysts at Citi who reckon soft March quarter production “will be swamped by price upgrades”.

Citi upgraded its recommendation on Rio Tinto to buy and lifted the price target from $120 to $135. Credit Suisse went further with a target price of $138.

“Despite trimming the calendar 2022 iron ore forecast to 320 million tonnes (the bottom end of guidance) this year’s earnings before tax and other charges is revised up by 4% and next year’s by 13%,” Citi said as Rio Tinto’s operational woes are washed away in a sea of cash.

The outlook for commodities, according to ANZ Bank’s latest Commodity Tracker report, is for prices to stay high for at least the rest of the year as a series of supply shocks roll through the global trade network, even as demand softens. If there is a contraction in prices, the bank believes it will be short-lived.

Top sectors on ANZ’s scorecard are energy and precious metals, with energy driven by geopolitical tensions, sluggish production, and inventory drawdowns, while precious metals will remain safe haven investments at a time of war and rising inflation.

Industrial metals and bulk commodities (iron ore and coal) have a neutral weighting even as some indicators show a weakening in demand, offset by declining inventories at terminal markets such as the London Metals Exchange.

Other newsworthy events and market moves this week included:

  • Uranium stocks continuing to firm as the price of the metal held on to its 11-year high of $US64 a pound, lifting Boss Energy by 17c to $2.91 and Paladin Energy by 4c to 91c.
  • St Barbara lost 13c to $1.47 but scored a buy tip from Macquarie Bank which likes its recent acquisition of Bardoc Gold and reckons St Barbara is heading up to $1.80.
  • Rox Resources added 3c to 41c after reporting a 7% increase in the gold resource to 3.2 million ounces at its Youanmi project in WA.
  • New Century Resources added 16c to $2.26 as confidence grows in the plan to revitalise the mothballed Mt Lyell copper mines in Tasmania with 2025 pencilled in as the start date for a project producing 30,000 tonnes of copper a year.
  • Black Cat Syndicate slipped 9.3c to 59c after completing a $35 million raising priced at 60c a share to fund the purchase of the Paulsens and Tanami gold projects in WA.
  • SolGold weakened by 4-pence to 34p on the London stock exchange after reporting a modest internal rate of return of 19.3% on its closely followed Cascabel copper and gold project in Ecuador.
  • Tempest Minerals slipped 1c to 11c as investors digested news of the company’s $8.44 million placement at 8.5c to help fund ongoing work at its promising Yalgoo copper discovery in WA which is being promoted as an extension of the nearby Golden Grove polymetallic mine.
  • Lefroy Exploration added 1.5c to 34c after reporting an expansion of its Burns gold/copper discovery near Kambalda in WA with the latest drilling returning a best hit of 84m at 2.8g/t of gold plus 0.34% copper from a depth of 118m,
  • OzAurum Resources rocketed 13.5c (134%) to 23c after reporting thick but low-grade gold assays from the latest drilling at the company’s Mulgabbie North project in WA with a best hit of 1.31g/t over 56m from a depth of 68m, including a high-grade zone of 18m at 2.07g/t.