Money Talks: RM Corporate Finance director Guy Le Page’s top rare earths, iron ore and tech 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 Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance.
Le Page has offered a handful of promising options as to what is hot right now or soon will be.
“Taking a medium-term view, this year we thought that iron ore would strengthen, which it has on the back of those supply disruptions in Brazil, and I think that will probably carry forward to next year,” he told Stockhead. “So we have shifted into some iron ore stocks.”
However, the selection on the junior end is quite sparse.
“There has been a lot of interest in magnetite, but I don’t think we’ve seen enough sustained strength to develop any real interest in that,” Le Page noted.
His other possible commodity picks are nickel, cobalt and rare earths.
But while nickel stockpiles have come down to “fairly low levels”, for the base metal to really run, demand needs to head north.
“Commodity recoveries are more demand driven than supply shortfall driven,” Le Page explained.
He also expects cobalt to have a “second wind” at probably around the same time nickel does next year.
“The other sector we’ve been calling – and we’ve seen some fairly aggressive moves – is rare earths,” Le Page added.
“We’ve been following Greenland Minerals & Energy, which has put on 40 per cent over the last three months.”
That followed news in March that global rare earths heavyweight Lynas (ASX:LYC) was the target of a $1.5 billion takeover play by Wesfarmers (ASX:WES).
“I think there’s some serious shortfalls coming sooner than later in rare earths,” Le Page said.
“I think to see any sustained run on the commodities front we’re going to need to see an end to the tariff wars, which I think will give it another leg up.”
Emerging rare earths producer Greenland Minerals & Energy (ASX:GGG) is Le Page’s top pick.
Greenland, which has market cap of around $125m at a share price of 12.5c, is advancing its Kvanefjeld project towards production.
The company is getting a lot closer to permitting, according to Le Page, and also has a big Chinese partner, Shenghe Resources — which has an 11 per cent stake in Greenland.
The Kvanefjeld project is expected to be one of the largest producers globally of key magnet metals including neodymium, praseodymium, dysprosium and terbium, along with by‐production of uranium and zinc, for nearly 40 years.
“I think the [net present value] per share attributable to Greenland Minerals & Energy is probably going to be north of $1 a share once it gets to production,” Le Page explained.
“So there’s still quite good upside.”
Next on Le Page’s pick list is iron ore explorer Fenix Resources (ASX:FEX), which has a market cap of $18.5m at a share price of 9c.
Le Page said at current spot iron ore prices Fenix’s Iron Ridge iron ore project should have earnings before interest, tax, depreciation and amortisation of somewhere in the order of $35-40m a year over a six-year mine life.
Lastly, Le Page likes PainChek (ASX:PCK), which has seen its share price more than triple since late April, when it revealed that it had secured a $5m grant from the federal government to facilitate the implementation of its pain recognition app in Australian residential aged care centres.
PainChek, which now has a market cap of $113m at a share price of 13c, has created an app that can track a person’s facial muscles to determine the level of pain they are in, even if they can’t vocalise that pain.
Le Page says that app will likely go international, which means there’s still more upside.
Here’s another expert who likes PainChek – Money Talks: Could one of these stock picks be the next ‘billion-dollar biotech’?
RM Research holds shares in all three stocks mentioned. The firm was also involved in the listing of Fenix last year and the backdoor listing of PainChek about three years ago, and has acted as an advisor to and written research for Greenland Minerals & Energy.
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.