• ASX 200 gains 1% 
  • Small Caps index does the same, but then gives it all back
  • ODE wins and NIC MD Justin Werner: Hengjaya joins world’s best nickel resources

 

The ASX Emerging Companies index (XEC) has given all away its early gains on Monday in a steady stream of deflation which in my humble opinion is deflating to look at:

Via Google Finance

That’s at about 10 mins past the closing bell, and just the slightest few points below parity.

Yeah, Monday started pretty well. The small cap index probably driven higher – as the benchmark ASX 200 was (+1%) today – in the slipstream of a Friday session on Wall Street which shot the lights out, the tech-heavy Nasdaq index jumping over 2%, for starters.

Upstairs, the iron ore majors led local gains, while nearly all 11 sectors on the exchange made forward steps, materials and tech among the best.

Despite some more-mixed-than-usual messages out of China, local investors have been moving confidently into some very choppy commodity prices, making optimistic bets that when the time comes, Chinese demand will skyrocket as stimulus packages arrive in the mail.

 

Talking of China-optimism…

Early excitement over the prospects of the a2 Milk Company (ASX:A2M) has reemerged after lunch, the dairy group moving ahead about 2.5% after it’s 20%-owned Kiwi manufacturer Synlait (ASX:SM1) secured renewal approval to produce Chinese-labelled infant formula until early 2023.

I wanted to share this on the macro front. it’s by CBA’s top agri-strategist Tobin Gorey who remains a repository of knowledge on everything that has anything to do with either agri or strategy and this makes particular sense, I feel:

The Ukraine-Russia war appears to be evolving rapidly.  

‘Ukraine’s rapid advance in eastern Ukraine has surprised strategic types.  And, perhaps more importantly, the evidently panicky retreat by Russia’s military hints at weakening morale that would diminish its effectiveness.  That morale factor is tempting some to draw a straight line from this evolution to certain outcomes, like an eventual Ukraine victory. 

As pleasing as that might be, we should resist such bloviating.  Russia’s military might or might not prove much of cornered animal, Russia’s President though is likely a different matter.  The likely continued strategic thrust and counter thrust make straight line paths seem less likely (though not impossible). 

Nonetheless, despite these dense qualifications, the situation has evolved rapidly.  And so, for all the possible paths the war might take from here, that evolution has materially shifted the probabilities across those paths. 

Time to be on our mental toes for the different implications to evolve. 

I am ever on my the tippy-toes of quality cognition, for example: I don’t know where CommSec and the Australian Institute of Petroleum (AIP) are buying their Range Rover diesel, but one is saying the other is saying Aussie drivers are now enjoying the lowest petrol prices of 2022.

The AIP reports the national average unleaded petrol price fell 8.5 cents a litre last week to an eight-month low of 164.4 cents a litre, as demand for crude oil softens amid  fears of a looming worldwide economic slowdown.

Either that or no one over yonder is taking into account the truly mad volatility energy markets copped last week.

No wait, this is why:

Via my cluttered inbox

There IS an app for that now, thanks CommBank.

Meanwhile Refinitiv just sent me their latest global banking scorecard, here’s the meat with three veg:

  • Global Mergers & Acquisitions total $2.6 trillion YTD 2022, down 32% from a year ago
  • US Investment Grade Corporate Debt issuance totals $683.6 billion YTD 2022, down 11% from a year ago
  • European Initial Public Offerings total $4.5 billion so far this year, down 92% compared to 2021 levels
  • Australian M&A  deals YonY% change -46%

M&A has halved since last year, and we have a podcast on that!

 

ASX SMALL CAP LEADERS

Here are the best performing ASX small cap stocks:

Swipe or scroll to reveal full table. Click headings to sort:

Wordpress Table Plugin

 

The diamond explorer Odessa Minerals (ASX:ODE) just segued sharply into the world of lithium and rare earths. Just saying the names of those up and coming sectors can buy you about a 7o% kick in the stock price.

Odessa told the willing world this morning that two of three Lyndon project tenements in WA have been granted, and exploration is ready to roll.

In April, ODE moved the acquire the 606sqkm project right next door to Dreadnought’s (ASX:DRE) recent rare earth discoveries at Mangaroon.

Dr DRE is now +200% after whacking into some not as rare as thought around here earths in June, during its first drill.

ODE is banking, Reuben says, on replicating a bit of Dr DRE’s early success.

Now we know why Nickel Mines is now called Nickel Industries (ASX:NIC).

The business MD Justin Werner runs out of Denpasar is closing in on double-digits after announcing a mega resource upgrade at its Hengjaya mine in Indonesia – one which could transform the ASX-lister into one of the world’s key suppliers.

With its Angel nickel project commissioned and Oracle RKEF plant under construction, by 2023 the fast growing nickel producer expects to be in the top-10 suppliers of nickel metal everywhere.

Our Josh Chiat and Justin talk Nickel and life here.

NIC MD Justin Werner said the resource update positions Hengjaya among the world’s ten largest nickel resources.

“We are delighted to deliver a significant increase in our Resource at the Hengjaya Mine from 2.4 million tonnes to 3.7 million tonnes of contained nickel metal representing a 56% increase, with further upside remaining. This places the Hengjaya Mine amongst the top 10 global nickel resources, highlighting the world class size of the deposit,” he said.

NIC’s high-grade saprolite resource of 72Mt at 1.8% nickel will be used to supply its Hengjaya, Ranger and Oracle plants, Josh says, which need around 8.8Mt of ore a year to run, with Hengjaya to supply 3.5-4Mt a year.

Meanwhile, Pioneer Credit (ASX:PNC)  has earned the name and about 17% on the nose by formally ditching its auditor Deloitte, and going with a younger, lesser known model, RSM Australia. Life with Deloitte had been a difficult one, ending in a hugely complicated refinancing.

And finally, kicking serious Monday butt is The Hydration Pharmaceuticals Company (ASX:HPC), wholesale suppliers and online retailers of Hydralyte – the electrolyte replacement goop that tastes like an orange that floated here from Spain – is up around 22% this morning on no news, flimsy volume.

At the end of last month, HPC trading as Hydralyte America revealed an 80% increase in revenue for the half year ending June 30.

Revenue rose to a recored U$4.1 million (compared to US$2.3 million in PcP) while e-commerce net revenue jumped over 95% (from circa US$900k to US$1.8 million). So…

 

ASX SMALL CAP LAGGARDS

Here are the best performing ASX small cap stocks:

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Mondays can be difficult for anyone, but more specifically for MA Financial, which the AFR reports took a more than 20% fall in just 19 minutes of Monday’s trading.

The radioactivity of “golden ticket” visas, and MA Financial’s proximity to them, a possible cause.

 

WHAT YOU MISSED ON MONDAY

Latrobe Magnesium (ASX:LMG) and Société Le Nickel have executed a binding MoU for the supply of 450,000 tonnes per annum of ferro-nickel slag for 20 years for its 100,000tpa magnesium plant as its feedstock, with an eye on expanding that up to 600,000 after SLN has done some work on upgrading its port facilities.

LME says that it’s a far more efficient prospect to produce magnesium using the slag, as the feedstock has nearly twice the Magnesium Oxide (MgO) content as Yallourn brown coal fly ash.

In the event SLN doesn’t end up expanding its port, OLME says it’s going to shop around to plug the 150,000tpa hole using feedstock from another supplier.

And The Star Entertainment Group (ASX:SGR) has called a trading halt today, on the eve of the release of the long-awaited final report of the review of The Star Sydney undertaken by Mr Adam Bell SC in accordance with the Casino Control Act 1992 (NSW).

Star says it hasn’t had a chance to review the document prior to its release, but it’s put trade in its shares on hold to prevent trading in securities in an uninformed market.
However… the findings of the report have already been reported (or at the very least, speculated upon with the help of people who know what’s in it) – and the news is not great.

The Australian let slip, late last night, that Bell’s report will recommend Star “should lose its licence to operate in NSW unless it overhauls its board and undertakes compliance reform”. Bell’s report has been in the hands of the NSW Liquor and Gaming Authority since earlier this month, so it’s hardly surprising that details have made their way into the public domain.

“We’re expecting the public release of the report to happen some time on Wednesday 13 September, so until then if you feel like having a punt on SGR, you’re gonna have to front up in person and run your pension through the pokies with the rest of Sydney’s High Rolling Elite.

 

TRADING HALTS

Link Administration Holdings (ASX:LNK) – Link got some info about some regulatory approvals which are part of the conditions of its sale to Dye & Durham.

Imugene Limited (ASX:IMU) – Imugene’s holding a cap raise to facilitate two new institutional investors climbing on board.

Structural Monitoring Systems (ASX:SMN) – It’s a capital raise. That’s all we know. 

Power Minerals (ASX:PNN) – And it’s another capital raise. At this point, if capital gets much higher, we’re calling an ambulance.

The Star Entertainment Group (ASX:SGR) – There’s a big report on the way. See above.

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