Money Talks: This expert’s top commodity picks are gold, diamonds and rare earths
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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 Warwick Grigor, executive chairman and managing director of Sydney-based private investment bank Far East Capital.
Grigor has a shareholding in most of these companies.
“In terms of sectors, I think that gold will still be generating a good deal of interest.”
“The trade war is going to lead to volatility, and rare earths are becoming more strategic, especially NdPr. The lighter rare earths are not so critical; it is NrPr that China is running out of.”
“Coal demand will also remain strong.”
— Stockhead (@StockheadAU) July 10, 2019
Exore Resources (ASX:ERX) is Grigor’s top gold pick.
The former lithium explorer made a move into gold last year – and hasn’t looked back. Now surrounded by several recent +1moz gold discoveries and operating gold mines in Cote D’Voire, cashed up Exore has a pipeline of large-scale drill targets keeping the drill rigs busy.
In early July, the company hit grades like 20m at 6.5g/t, just 8m from surface at its flagship Veronique discovery.
“Operating in Cote d’Voire, it has a good ground position in a good address,” Grigor says.
“A large cash balance of more than $10m will allow for plenty of results before going back to the market.”
Grigor also likes the look of Bellevue Gold (ASX:BGL), which has already hit 1 million ounces at its namesake project in Western Australia.
“But that is the beginning – right now, it looks like one of the best gold exploration plays,” he says.
Grigor is also following base metals minnow Alicanto Minerals (ASX:AQI) which recently picked up some very good exploration ground in Sweden along strike from historically rich, large mines.
Alicanto is currently pivoting away from gold after signing a $11.6m exploration and potential purchase deal with gold major Nordgold over its Arakaka project in Guyana.
Nordgold can acquire Arakaka by sole funding $4.3m in exploration expenditure over the next year. After this, it can give Alicanto an extra $7.3m to finalise the acquisition.
Alicanto chief executive Peter George says the company is pleased with the Nordgold deal – but it’s also keen to kick off exploration at its newly acquired Swedish base metals projects.
Grigor says these Swedish projects will be drilled in August/September.
“Speculative but exciting,” he says.
When it comes to heavy are earths, Grigor likes both Peak Resources (ASX:PEK) and Pensana Metals (ASX:PM8).
“Peak will be more of an integrated producer when the time is right, while Pensana is focusing on a project that will ship concentrates from Angola,” Grigor says.
“Both will continue to perform in the markets.”
Grigor is a big believer in diamond producer Lucapa (ASX:LOM).
“The fundamentals look very attractive based on existing production, but the market is not switched on to diamonds as there have been too many failures and too many undelivered promises,” Grigor says.
“Lupaca now has two mines in production with high value stones.
“The next 12 months will see a re-rating as the company reports real earnings.”
Warwick Grigor started his career in mining with a position in the finance department of Hamersley Iron. From there he moved to Jackson, Graham, Moore and Partners to become Australia’s first specialist gold mining analyst.
Having established Jacksons as a leading gold research stockbroker, Grigor left to be the founding research partner at Pembroke Securities and then the senior gold analyst at County NatWest Securities, for five years. He retired from County and founded Far East Capital in 1991.