The best example of the clash between good and bad news was in the historically important but now largely overlooked business of zinc and lead which launched the modern Australian mining industry at Broken Hill more than 100 years ago.

Rumble Resources was the zinc star with a share price rise of 6c (32%) to 25c after reporting an encouraging initial mineral resource at its Earaheedy project in the south of WA, which is rated as the best zinc and lead discovery anywhere in the world for the past 10 years.
Bell Potter, a stockbroking firm, reckons Rumble is a winner with the stock likely to almost double to 45c.

It was a different story at Galena Mining which lost 8.3c (33%) to 15c after being forced to raise $20 million to cover a cost blow-out in the early stages mining at the Abra lead project in the north of WA.

The mixed result of Rumble v Galena was a draw (one up, one down). This largely summed up the overall state of the stock market, which effectively flatlined through the week to be up a modest 0.64% at the close yesterday as measured by the all-ordinaries index, while the metals index was up by a tiny 0.44%.

Gold, which often comes to the aid of a lifeless market, trended down with the price of the metal slipping back below the US$2000 an ounce mark to trade at US$1992/oz, taking the Australian gold index down by 1.8%.

What happened on the Australian market this week can be likened to the doldrums weather effect experienced close to the equator where there are long periods of nothing happening, punctuated by violent storms.

Investment markets are in the doldrums today and there could be storms ahead as central banks continue to fight inflation with ever-rising interest rates accompanied by governments trying to balance their budgets by raising taxes.

Australia’s next day of budget reckoning is May 6 but a shake-up of the Reserve Bank board announced on Wednesday was an early warning that there is a hunt underway for scapegoats.

That could lead to the Australian Government taking an easy way out of its problems by not pushing ahead with the higher rates needed to put the inflation genie back in her box.

Holding or cutting rates early might be politically popular but it would also be a great example of kicking the can down the road.

None of what’s happening is good news for investors with money that once flowed freely from governments after the Covid crisis now being reeled back in.

Cost pressures, caused largely by weather events, were a factor in mining leader Rio Tinto suffering a sharp sell off after releasing what looked to be a solid March quarter production report, topped by a strong recovery in iron ore output, not enough to save the stock from a $3 fall to $120.

RBC Capital Markets took a particularly dim view of the outlook for Rio Tinto, downgrading the stock to sell with a price target of $97.

Gold, as mentioned, failed to hang on to its recent US$200 an ounce increase from US$1808/oz just five weeks ago to US$2046/oz at the end of last week, sliding over the past 48 hours to US$1992, taking most gold-exposed miners with it.

Bellevue, which has moved to be within sight of first gold at its namesake mine in WA, lost 14c to $1.38 in what was one of the better performances in an overall down week.

Other gold moves included Tietto, down 14c to 64c despite reporting a 10% increase in the gold resource at its Abujar project in Ivory Coast. Regis was down 25c to $2.16 after reporting weak March quarter production. Evolution was down 17c to $3.50 after reporting reduced production and higher costs and troubled St Barbara was down 16c to 56c, zipping past RBC’s latest price tip of 61c.

It was into this sea of red ink among gold stocks that ANZ Bank waded with a bullish report headline “Gold’s time to shine”, complete with a repeat of its end of year gold price forecast of US$2050/oz, a level aided by a weakening of the U.S. dollar.

Battery metals, led by lithium, staged a modest recovery after a poor start to the year, after allowing for the high-priced takeover offer for Liontown by U.S. leader Albemarle.

News and moves among lithium stocks this week included:

  • Lord Resources reporting encouraging drill results at its Horse Rocks project south of Coolgardie in WA with 47 of 52 holes intersecting pegmatite, one of lithium’s host rocks. On the market, low profile Lord added 4c to 27c.
  • Cygnus added 4.5c to 28c after announcing its best drill result so far from its Pontax project in Canada with a top hit of 23.4 metres at 1.4% lithium.
  • Latin Resources rose by 1c to 12c after announcing a $37.1 million capital raising priced at 10.5c for work on its Salinas project in Brazil.
  • Core added 9.2c to $1 after upgrading the resource estimate for its Finniss project in the Northern Territory to 30.6 million tonnes to 1.31% lithium CG Capital Markets tipping a future price of $1.45 while Morgans said $1 was as good as it gets, and
  • Pilbara Minerals reclaimed 33c to trade at $3.92 while UBS said the stock was heading back up to $4.60.

Nickel, another important battery metal, attracted the attention of specialist London-based resource sector financier, RFC Ambrian, which sees the potential for more takeover activity after moves on Western Areas and Mincor.

But a feature of the RFC analysis was a lack of names, with the nickel cupboard almost bare, leaving Panoramic, Poseidon, Lunnon, Centaurus and Ardea among the last small nickel-exposed stocks.

Centaurus responded to being named on a potential target list with a share price rise of 1.5c to 91c. Ardea was up 0.5c to 32c. Panoramic rose by 1.2c to 15c, Lunnon lost 6.5c to $1.12 and Poseidon was steady at 3.9c.

Rare earth stocks continued to attract speculative interest thanks to threats from China to curtail supply.

Most local rare earth stocks firmed this week led by Australian Rare Earths, up 8c to 62c, Lynas, up 5c to $6.35, Narryer, up 2.5c to 12c, and Moho, up 1c to 2.3c.

The next two weeks promise to produce a sea of paper as March quarter reports are filed with investment banks offering advice for what investors should keep an eye on, such as:

  • Morgan Stanley warning that uncontracted lithium production could weigh on the margins of several producers, including Mineral Resources and Pilbara. Weather disruptions, which have already hit 29M and Evolution could also eat cut into output.
  • UBS echoed the weather warning and said it preferred gold, base metal and lithium stocks heading into the June quarter with buy ratings on Pilbara, IGO and Allkem, and
  • Credit Suisse said it too preferred gold for near-term mining exposure with Northern Star and Perseus top of its recommendations.

Tin, despite its ultra-thin market caught the eye of commodity watchers after a threat to a halt production in Myanmar, one of the major sources of the metal.

But even with a 10% jump in the price, taking the one-month rise to 20%, the handful of local tin-exposed stocks moved modestly with MetalsX leading the way with a 3c rise to 33c. Sky Metals crept up by 0.3c to 6.1 while Elementos slipped 1c lower to 17c.

Other news and market moves in what was a directionless week included:

  • Jervois Global rising 0.5c to 11c after saying it was undertaking a bankable study into building a cobalt refinery in the U.S.
  • Whitehaven Coal sinking another 5c to $6.94 in a weak market for coal, while retaining a buy tip from Morgans and a price target of $9.85.
  • Surefire Resources adding 0.1c to 2.4c after reporting that it had completed an environmental survey as a step towards a mining licence for its Victory Bore vanadium project in WA.
  • Adriatic slipping 3c lower to $3.65 despite reporting encouraging assays from the latest drilling at its Rupice silver and zinc project in Bosnia, and
  • Tigers Realm shedding another 0.2c to 1c as it comes under pressure to pull out of Russia where it has coal interests.