Guy on Rocks: Virus deletes big chunk of South American nickel and copper production from 2020
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‘Guy on Rocks’ is a Stockhead series looking at significant happenings in the resources sector each week.
Former geologist and experienced stockbroker Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.
Market ructions
Skyrocketing coronavirus cases in South America is continuing to impact the supply of commodities, which is actually a good thing for explorers and producers in other countries, especially Australia.
“I’ve seen forecasts of a 20 per cent drop in nickel production in this calendar year,” Guy Le Page said.
There are also continuing disruptions to copper supply in Peru, Chile, South Africa and Mexico.
“You’ve had that protracted growth in Chile, which potentially could take more than 50,000 tonnes per annum out of the market,” Le Page said.
“So I think that’s quite bullish for resources generally.
“I think that that’ll keep it up with the weak Australian dollar and obviously iron ore staying up where it is, that’s pretty bullish.”
Hot stocks to watch
Catching Le Page’s eye this week is Sweden-focused explorer Alicanto Minerals (ASX:AQI).
Alicanto, which has a market cap of $15.5m, has a portfolio of projects in the historic mining district of Bergslagen in Southern Sweden.
The region hosts three major VMS deposits – Boliden’s Garpenberg, where 33.5 million tonnes of ore has been mined since 1957, Lundin Mining-operated Zinkgruvan, which has a reserve of 46.9 million tonnes, and the past producing Falun deposit, where 28 million tonnes was mined up to 1992.
VMS deposits are created as a result of underground volcanic activity, and are commonly associated with high grades of copper, zinc, lead, gold and silver.
Le Page says Alicanto has been “kicking some big goals” in Sweden.
“They’ve got this 1.3 by 14km long copper-gold skarn zone with lots of high-grade copper-gold that is at surface. That’s an area that hasn’t had a lot of modern exploration done,” he noted.
Alicanto’s Oxberg, Naverberg and Wolf Mountain projects are all near the Falun mine.
“These projects are all dotted around there, but [Alicanto] have done a lot of reinterpretation of some of the geology in the area and they believe they may have a repeat of the Falun copper mineralisation, which they believe is outcropping on their tenements,” Le Page said.
“Falun produced about 28 million tonnes at 4 per cent copper, 4 grams per tonne gold, 5 per cent zinc, 2 per cent lead, 35 grams silver.
“So that’s what they’re trying to target – these very high-grade skarns.”
Alicanto also believes it has a repeat of the Falun mineralisation at its Wolf Mountain prospect.
The company recently applied for an additional 158sqkm of prospective tenure after uncovering a number of new, completely undrilled copper-gold targets near Wolf Mountain.
Of these new targets, the Heden prospect, is now a high-priority drill target for the company.
“At Heden they’ve got this newly discovered mineralised zone,” Le Page said.
“They’ve got some small-scale copper workings, not dissimilar to what they’re seeing at Wolf Mountain. They’re getting results up to 3 per cent copper over a kilometre, 200m width.
“So for a polymetallic play I think this is one of the more interesting ones. I think this is pretty exciting and with a pretty interesting board and exploration team and some pretty high-grade results. I’m pretty optimistic for the next six months here.”
At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting and corporate advisory roles.
He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada and the United States.
