• The ASX 200 and XEC small cap indices rise
  • Attention turns to Tuesday’s date with RBA destiny
  • Celsius Resources is hot

 

The ASX 200 and the Emerging Markets (XEC) indices are both trading higher on Monday up about 1.2%, ahead of tomorrow’s cash rate showdown between high-flying inflation and dogged monetary policy.

All sectors are making money on Monday but it’s the energy names, the goldies and a stonking run for the REITs that are turning heads ahead of Tuesday’s tweaking of the cash rate.

Peter Warnes head of equities research at Morningstar Australasia says the Reserve bank is part of a central bank cabal playing a dangerous game of catch up.

“Central banks are now talking tough. After months behind the ball belated heavy-handed action is raising fears of a recession next year,” Warnes said. “A growing body of opinion believes rates may need to be cut again in 2023 as economic growth slides.”

Warnes warns that wresting control of inflation is a risky business which looks like it’ll be needing a meaningful contraction in economic activity.

“The nightmare scenario would be stagflation, where central banks do not kill growth, but inflation escapes unscathed. Either way, the near-term outlook for equity markets is not overly encouraging.

“Rallies are likely, reflecting mood swings but there is no room for complacency.”

Meanwhile, standout winner of Stockhead’s 2022 top ten or so journalists, Emma Davies, says the standout small cap of June was the HR and human capital manager PayGroup (ASX:PYG) which enjoyed a 160% rise on the smell of a $120 million takeover bid from American startup unicorn Deel.

Deel’s Aussie business wants to snap up and eat PayGroup in an all-cash feast of human resource deliciousness and pay the group one Aussie dollar for each shiny new share – a 175% premium on PYG’s close of around $0.36 on the 22nd of June.

It’s not been fun for the major iron ore miners of late. Iron ore futures were down over 10% as China gets a little more COVID-ish and the steel making boffins try to turn off the melters and use up these giant stockpiles.

The casino-covered isle of Macau in south China reported its first official COVID-deaths over the weekend, that smashed casino and gaming shares in Hong Kong and almost certainly made newly Crown Resorts-free James Packer have another finger bun.

The Hang Seng Index is down about 1%,  but that could be more this week if this Reuters report turns has merit and this coronavirus positive official gave Chinese President Xi Jinping COVID during the bosses weekend visit.

 

TODAY’S BIGGEST SMALL CAP WINNERS

(Stocks highlighted in yellow rose after making announcements during the trading day).

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Dimerix’s (ASX:DXB) DMX-700 treatment for Chronic Obstructive Pulmonary Disease showed great promise when tested on the tiny little lungs of some highly unfortunate mice.

The market liked the results – an 80% reduction in lung injury – and threw enough money at DXB to push its price up 20%.

And Volpara Health Technologies (ASX:VHT) has signed of a new 42-month contract with RadRet – the raddest net in the exciting field of medical records management – pushing it’s price up more than 19%.

Celsius Resources (ASX:CLA) is so hot right now.™

That ladies and gents is the trademark gag for when one so named hits a highlight 611.4m-long intersection at 1.39% copper and 0.75g/t gold in drilling at its flagship MCB project in the Philippines.

There’s also excitement over this 77.5m-long high-grade portion grading 2.47% copper and 2.12 g/t gold (3.34% copper equivalent) from 232.10m.

The hole they call MCB-038 was designed to improve confidence in the existing 1.5 million tonnes copper and 1.47 million ounces gold resource, in addition to defining further higher-grade areas to enhance the upcoming feasibility study.

Confidence has been improved. MCB-038 confirmed the presence of an extensive shallow higher-grade position, says CLA exec chairman Martin Buckingham says.

“We still have a few more diamond drill holes to come which are planned to further define the shallow and easy to access higher-grade copper at MCB,” he says.

“The drilling results over the past 6 months have identified important additions to copper mineralisation and we are looking forward to understanding the impact of these results as we move into our JORC Update resource estimate and feasibility studies in the second half of this year.”

A Scoping Study for the project announced December 2021 eyed the development of an underground copper-gold operation with a 25-year mine life.

Highlights from the Scoping study includes a Post tax NPV (8%) of US$464m and IRR of 35%, assuming a copper price of US$4.00/lb and gold price of US$1,695/oz.

Initial cap-ex was pegged to be US$253m with a payback period of ~2.7 years.

Reuben says the $34m market cap stock is flat year-to-date. It had $3.5m in the bank at the end of March.

 

TODAY’S BIGGEST SMALL CAP LOSERS 

(Stocks highlighted in yellow rose after making announcements during the trading day).

Scroll or swipe to reveal table. Click headings to sort.

STUFF YOU’VE LIKELY MISSED

Marquee Resources Limited (ASX:MQR) has announced that it has asked for and received a one-week extension on the Binding Term Sheet with Mineral Resources (ASX:MIN) that was announced on June 2, to give MQR a bit more time to make sure its due diligence has been diligently done before the diligence deadline is due.

Meanwhile, ASF Group (ASX:AFA) has announced an on-market buy-back offer. The company is looking to wrap up 79,257,377 ordinary fully paid shares, and will be unchaining the cheque book on July 18. Bell Potter Securities Limited is overseeing the whole thing, which is due to be wrapped up by July 17 next year. 

And finally, a quick “thanks for the lesson” the update and something of a mea culpa, as your humble(d) correspondent [the new guy, Gregor – not Christian, he’s okay, I guess] reflects on giving BetaShares something of an entirely unwarranted lampooning on Friday.

All I can say is I took a stick to BetaShares for going ex-div at the end of last week. For that oversight, I apologise. I am a goose. But in making this admission, I hope of the kinder, more self-reflective and generous feather than most other financial journalists. Like Christian.

 

TRADING HALTS

Arrow Minerals Limited (ASX:AMD) – capital raising and execution of a non-binding terms sheet to acquire an interest in an exploration project located in Guinea, West Africa.

Redcastle Resources Limited (ASX:RC1) – Pending an announcement in relation to exploration results for the Redcastle Project.

GBM Resources Limited (ASX:GBZ) – Capital raising.

Galileo Mining Limited (ASX:GAL) – Capital raising.

Propell Holdings Limited (ASX:PHL) – Capital raising.

Dacian Gold Limited (ASX:DCN) – Capital raising.

Genesis Minerals Limited (ASX:GMD) – Capital raising.

Cyprium Metals Limited (ASX:CYM) – C-c-c-combo breaker. Cyprium is seeking WA Supreme Court orders pertaining to the Company’s inadvertent administrative error to lodge a cleansing notice in relation to the issue of shares on 11 December 2020.

Neurotech International Limited (ASX:NTI) – Results of its Phase I/II clinical study of the NTI164 strain in paediatric Autism Spectrum Disorder are set to be announced.