Money Talks: Nickel and zinc are this expert’s hot stock picks
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Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to see what’s hot, their top picks and what they’re looking out for.
Today, we hear from Noel Ong, founder of Perth-based consultancy Samso.
Ong says the nickel sulphides and zinc spaces look particularly attractive right now.
Nickel is usually found in two main ore types – sulphide or laterite. Sulphides are much cheaper and easier to turn into battery grade nickel sulphate than nickel laterites and fetch a higher price.
The push to electrify vehicles is one of the key reasons demand for nickel sulphides will increase.
And according to Ong, there isn’t a lot of nickel sulphide supply.
“Nickel sulphides actually are not that easy to find,” he told Stockhead.
“There’s a big supply shortage. A lot of mines have shut down. Even people like Panoramic that has started up are having a few issues.”
Ong says nickel is probably the “first cab off the rank” with respect to a significant increase demand thanks to the EV revolution.
Zinc is also a story of anticipated shortfall in supply and big demand increase, according to Ong.
“When there is suddenly a shortage of supply against an increase in demand, zinc is going to fly because there isn’t a lot of zinc out there,” he said.
“Zinc is the other forgotten commodity.”
St George (ASX:SGQ) is Ong’s pick in the nickel sulphide space, mainly because it has some good hits.
The junior explorer, which has a market cap of just under $36m at a share price of 13c, this week revealed it had uncovered a number of new, high priority nickel and copper sulphide targets at its Mt Alexander project in Western Australia.
So far, high-grade nickel and copper sulphides have been intersected across a 4.5km strike of the Cathedrals Belt.
Of the small cap zinc players, Ong likes Adriatic Metals (ASX:ADT), which has been finding a fair bit of high-grade zinc at its projects in Bosnia & Herzegovina.
Adriatic has a market cap of just under $96m at a share price of 94c.
“They had a couple of good intercepts – 72m at 18.3 per cent zinc and 46m at 12.7 per cent zinc,” Ong pointed out.
“I always said that when you get these kinds of lengthy intercepts you’ve more or less discovered the deposit; you’ve just got to drill it out.”
The other plus for Adriatic, according to Ong, is its location.
“I’ve liked that part of Europe for a long time because you have a region that is looking to boost employment, so you’re probably going to get favourable jurisdiction laws to get things happening,” he said.
Venturex Resources (ASX:VXR), which has a market cap of $49m at a share price of 17.5c, is Ong’s third pick.
The company’s flagship project is a big copper deposit, but the icing on the cake is the high-grade zinc that comes with it.
The Sulphur Springs project in Western Australia currently hosts a resource of 17.4 million tonnes at 1.3 per cent copper and 4.2 per cent zinc.
“The interesting part about that one is that Northern Star (ASX:NST) is a big shareholder in the company,” Ong noted.
“So they’re probably going to have no issues raising money to get that up and running.”
Noel Ong is the founder of Samso, a consulting agency that writes organic content as insights into companies and new ideas. Ong has worked in the resources industry for nearly 30 years as an exploration geologist and as the founding director of Siburan Resources.