April Winners: Mining stocks save the day, everything else wilts like Woolies carrots
Link copied to
The stuffing was well and truly knocked out of markets in April.
In Australia, inflation is running hot at the fastest annual rate in 21 years, thanks to high oil prices, COVID in China, and war in Ukraine.
Three consecutively higher core inflation readings provided the Reserve Bank of Australia (RBA) with the smoking gun needed for a May lift-off in the cash rate. Interest rate rises are now imminent.
Share markets don’t like interest rate rises, high energy prices, or self-imposed COVID shutdowns in the world’s #2 economy, China. This is a global phenomenon, with growth-focused US markets experiencing their worst month in two years.
“It was a harrowing month for US equities that closed on a decidedly dour note Friday when stocks heeled over close to 4% lower in one of the most painful single-session routs since March 2020,” managing partner SPI Asset Management Stephen Innes said late April.
“April was already poised to be Wall Street’s worst month since the pandemic struck fear into the heart of investors, so Friday’s carnage was an insult to injury,” he said.
“The slippery slope to the broader tape can steep when mega-cap tumbles because the ‘broad’ market is not that broad.
“US equities live and die by a handful of names, and those favourite Wall Street placeholders were bearing the sell-off brunt.”
The Aussie bourse did better, but the benchmark ASX 200 still fell 0.86% for the month.
You can read more about April’s commodity price movements here.
“Commodities work as a hedge against inflation, and they are clearly rising with inflation this year,” Nabtrade said.
Mining has been the ASX’s bright light, and there’s cause for further optimism.
While short on detail, China’s announcement of a broad-based infrastructure investment to kickstart the economy ended the month on a positive note.
In March, the S&P/ASX Emerging Companies [XEC] index was up 10.1% and 17 ASX small caps surged by 100% or more. 16 of them were resources stocks.
In April it fell ~4.8% but, despite the gloom, 11 stocks (again mostly resources) gained 100% or more. Which ain’t so bad.
Scroll or swipe to reveal table. Click headings to sort.
The explorer emphasised a focus on vanadium, which it calls “a strategic battery metal for a cleaner future”.
92% of vanadium consumption is used to strengthen steel. Of the remainder, most is used in aerospace alloys and chemical catalysts, and ~1-2% goes into vanadium redox flow batteries (VRFBs).
Unlike lithium-ion, VRFBs – a perfect fit for large stationary storage — are yet to have their ‘big battery’ moment.
SRN reckons its time is coming.
SRN’s ‘Victory Bore/Unaly Hill’ project has an inferred resource of 237Mt @ 0.43% vanadium pentoxide (V2O5), 24.9% Fe, and 5.9% TiO2, making it one of the largest contained V2O5 resources in WA.
Planning is currently underway for diamond drilling on the property, the company says.
The data will be used to undertake development studies, with consulting firm MinRizon Projects also engaged to update CAPEX and OPEX estimates as a prelude to initiating a prefeasibility study.
ALY found multiple lithium anomalies at its Karonie gold project, 8km along strike and within contiguous tenure to Global Lithium Resources’ (ASX:GL1) ‘Manna’ lithium deposit (9.9Mt at 1.14% Li201).
“The geochemical review reaffirms the prospectivity of our large tenement package at Karonie in what has historically only ever seen gold and base metals exploration,” CEO James Wilson said.
Detailed mapping and sampling are ongoing.
Hawsons’ selling point is its super high grade 70% grade iron ore product from its namesake project in NSW, which is suited to emerging green steelmaking tech.
If it goes into production HIO could garner ultra-high Grange Resources-like premiums on top of benchmark prices (62% index).
In April, the Federal Government renewed the Hawsons Iron Project’s Major Project Status for three more years “in recognition of its potential to supply high-quality magnetite for the production of low emissions steel”.
A Bankable Feasibility Study (BFS) for the project is on track for completion in December 2022.
PTR made a major rare earth discovery at the ‘Comet’ project in the Northern Gawler Craton of South Australia.
Shallow drilling tested the top three metres of the prospective clay horizon where mineralisation encountered “impressive concentrations of high-value REEs”, the company says.
All 44 holes returned strong results with 23 holes hitting TREO > 1,000ppm, with PTR describing these intersections as similar in characteristics and grades to ion-absorption rare earth deposits of China – a major world supplier.
JV partners Legacy Iron Ore (ASX:LCY) and HAW cemented a deal with a subsidiary of Gina Rinehart’s Hancock Prospecting, which will shell out an initial $9m to earn into the ‘Mt Bevan’ iron ore project in WA.
Mt Bevan hosts a 1,170 million tonne magnetite resource @ 34.9% iron, 250km north of Kalgoorlie in WA.
Hancock will make an initial investment of $9m to earn a 30% interest in Mt Bevan, with $8m cash being paid to Legacy and Hawthorn in proportion to their interest in the project (Legacy $4.8m and Hawthorn $3.2m).
The remaining $1m will be working capital.
Hancock will hold a 30% interest, LCY will hold 42% and HAW will hold 28% upon completion of the initial investment.
Hancock can earn an additional 21% by funding the completion of a pre-feasibility study (PFS), a detailed look at whether the project is economic to build.
HCD says the deal is expected to generate some $140K, but that’s not taking into account the kudos factor of supplanting one of the world’s giant oilfield chemical cleaners, which Santos ditched in favour of the local kid.
KTA exploded out of a trading halt to announce a “major clay hosted rare earth discovery” at its ‘Mt Clere’ project in WA.
The first batch of drilling assays from Mt Clere’s ‘Tower’ prospect returned a multitude of thick, shallow hits like 15m at 1,395ppm (parts per million) total rare earth oxides (TREO) from 16m depth.
The company has only covered a 6km area so far, CEO Mark Major says, with the thick and shallow mineralisation remaining ‘open’.
More drilling results are pending.
Early in the month MM1 entered into an agreement with DiscovEx Resources (ASX:DCX) to acquire the ‘Newington’ project in WA, which is prospective for gold and lithium.
The Southern Cross Greenstone Belt hosts numerous gold deposits and also contains the Mt Holland pegmatite hosted lithium deposit being developed by the Wesfarmers and SQM Covalent JV.
Under the radar Australian junior CZR is looking to unlock an iron ore payday with the ‘Robe Mesa’ DSO mine immediately north Rio Tinto’s Mesa F deposit in the Pilbara.
The company is looking to ramp up its proposed production rate from 2Mtpa of hematite DSO to 3Mtpa in an upcoming DFS after a host of new drilling results identified mineralisation outside its PFS mine plan.
A new resource is due in the June quarter, with diamond and extensional RC drilling also planned.
CSE is a small cap explorer looking for new projects.
The right acquisition can transform a shell company’s fortunes. Just look at former minnow TAO Commodities (now Iperionx ASX:IPX), which caught a rocket after buying a big titanium, zircon and rare earths project in the US.
CSE has been creeping higher ever since a mystery investor poured in $1.1m earlier in April, at a small discount to the last closing price.
“Funds raised under the Placement will be used for general working capital purposes including costs associated with the potential acquisition of suitable project(s) including due diligence and any potential re-compliance costs,” the company said.
Then, late in the month, non-exec director Brendan Jesser bought 1m shares on market for $142,500 at 14.25c per share.
CSE is currently reviewing several different projects in the Materials space.
“We undertook high level due diligence on several of these and this continues today,” it says.
“Our current attention is on the Materials and related sectors, and we anticipate advancing projects during the current quarter.”