ASX Small Caps and IPO Weekly Wrap: Dear Menulog… For dinner, I’d like some Earths (rare) and a side of lithium
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After the second shortened trading week in a row – because Jesus died for our sins, and firmly believed that a four-day working week is the way of the future – the ASX has done pretty well.
Every ASX sector managed to finish the week above break-even, delighting investors and thumbing its nose at the Net Zero crowd, with a tidy +1.98% it can wave in everyone’s faces all weekend.
Materials banked the best of the returns this week, piling on 3.8% to earn Best Performance by a Major Sector in an Animated ASX Feature, beating out close rivals InfoTech (+2.5%) and sleazy old Real Estate (+2.0%).
Bottom of the ladder, and only barely above the low tide markers, was Utilities at +0.15%, right on the heels of a labouring Health Care sector on +0.17%.
A lot of the action this week came from the Goldies again, which made the rest of the market look a bit clueless and pathetic by comparison.
If the week had been a 100m running race, the XGD ASX All Ords Gold index would have been thrusting its chest over the finish before its closest competitor, XJR ASX 200 Resources, was waddling past the 50m mark.
The final numbers for the week put Goldies up 7.0%, Resources next best on +3.5% and the XSO Small Ords in third on +2.9%.
News-wise, this week was a real mixed-bag – happily it was more chocolate buds than black jellybeans, which are horrible things that look and taste like rabbit poo from a bunny condemned to spend a fiery eternity in a burning hutch behind the throne of Satan.
Investors are still feeling a little iffy on where things are heading, in terms of interest rates – obvious from the continued climb into gold, which in turn is driving a goodly chunk of interest from the less risk-averse among ASX investors.
That has certainly helped ASX gold stocks to keep rising steadily. Last week, it was +8.2%, the week before that was +6.2%, and the week before that was 5.6%, and the week before that was +4.9%.
I started adding all that up, got halfway through before realising that the maths behind it is a bit more complex than my word-based brain can handle… because I know how to write good, but I can only maths at like a 3rd grade level. Even then it’s limited to 5 minutes bursts, or I get a nosebleed and go blind in one eye.
But what I can tell you is that ASX gold stocks are now up 26.5% for the past four weeks, and 31.8% since the start of the calendar year – and way, waaay ahead of the running 12-month total of a comparatively paltry +2.35%.
Lurking behind a lot of that movement has been one particular rising star, which found its way back into the Small Cap headlines this week – and that’s Besra Gold (ASX:BEZ) which banked another medal-winner day on Wednesday.
The obvious market darling – fresh from barrelling into the rarified air of more-than-300% gains – was top of mind again this week, adding 37.5% on 12 April, despite not having any fresh news for investors to blame for what is rapidly turning into compulsive BEZ-buying.
An often-useful scan for Small Cap enthusiasts, the XEC ASX Emerging Companies index offers a more rounded look at how the minis and micros are faring – and this week, a 1.12% rise offers a clear indication of how tough it’s been for companies outside the spotlight this week.
(Ed: Just hurry up and go on holiday)
But despite all the talk of gold, it’s been a big week for those ‘fancy new metals with the funny names’ – and lithium, because it’s lithium – after China started making all-too-familiar outrageously-transparent protectionism noises.
Far East Capital (FEC) analyst and founder Warwick Grigor (no relation) broke the news that China was “considering banning exports of various rare-earth magnet production and process/refining technologies as a response to the US targeting the Chinese chip-making industry”.
“The last major official rare earth policy shift by Beijing saw NdPr prices skyrocket when exports to Japan were suspended in 2010, over the Senkaku Islands,” Grigor wrote, citing “a dispatch from China”.
Quite presciently, Grigor specifically name-dropped Australian Rare Earths (ASX:AR3) as “one to watch” – fittingly, more on them later.
Of course, thanks to China’s rumblings, everyone went mental and interest in REEs shot up faster than your mother-in-law’s eyebrows when your four-year-old drops a C-Bomb over the dinner table.
And it’s a major reason why this week’s Top Three Small Caps are where they are on the ladder.
Here are the best performing ASX small cap stocks from 11-14 April:
Swipe or scroll to reveal full table. Click headings to sort:
It was neck-and-neck for a couple of New World metals companies, with top spot for the week nabbed by a narrow margin by Australian Rare Earths (ASX:AR3), up 132% thanks to a serious TREO hit.
AR3 took Tuesday by the shoulders and shook it like a gluggy supplement, dropping news that it had drilled into high grade intercepts of up to 4839ppm TREO at its newly-discovered Western Zone at Cowalinya.
AR3 has reported that an impressive total of 159 mineralised intercepts have been drilled, covering approximately 13km2 – which in old-school Imperial measurements is “just shy of 600 Bunnings”.
The results confirm the potential to host a material increase in rare earths resources – which are so hot right now – with the company saying it’s working its way through the required process to upgrade its current Inferred Resource of 28Mt @ 625ppm TREO, once assays from another 36 holes are in.
In very close second, on +130%, is the week’s runaway IPO success Evergreen Lithium (ASX:EG1), which went live on Tuesday after a $7 million IPO that had shares priced at an ambitious $0.30 a pop.
Turns out, everyone who piled into the IPO was keeping remarkably quiet about how much of a massive bargain that was – because once EG1 went live, the scrum that formed around it resembled the All Blacks making the Wallabies forward pack look like a simpering group of Casper Milquetoasts, and Evergreen began to climb.
It is the best post-IPO week so far this year, and will 100% light more than a few fires underneath the next few IPOs on the ‘coming soon’ list, and a massive shot of confidence in what Evergreen’s bringing to the table.
And in third for the week is Prospech (ASX:PRS), which would have easily topped the table on most other weeks, but this time round its +102% could only muster up a (still impressive – don’t get me wrong) bronze.
PRS probably couldn’t have timed its announcement any better – on the heels of Grigor’s (no relation) missive, the explorer unveiled a potential REE monster at the recently acquired Jokikangas project in Finland, with highlights of 0.20m @ 24,448ppm TREO and 4,700ppm niobium from 74.2m.
The explorer has started sampling wider intervals of the Jokikangas drill core, which includes 36 diamond drill holes at Jokikangas and 68 diamond drill holes at Korsnas.
(Jokikangas is, by the way, Finnish for “river cloth”. I looked it up, so that you don’t have to. You’re welcome.)
Korsnas surrounds a former lead mine, where previous operators reported total REE content in samples ranging from 0.7% to 2.2%.
Here are the least-best performing ASX small cap stocks from 11-14 April:
Swipe or scroll to reveal full table. Click headings to sort:
Listing: 11 April, 2023
IPO: $7 million at $0.30 per share
Normally, IPOs don’t attract enough attention to warrant more than a quick mention in the Winner’s section of our Weekly Wrap, but this one did.
Evergreen Lithium went gangbusters, popped a +130% climb from the moment it went live – and all the juicy details are just a few upward scrolls away, in case (for whatever obscure reason), you came straight to this bit and didn’t read anything else on the page.
So… scroll up, and read to your heart’s content – because I’m not re-writing it all. It’s Friday arvo and I’ve got some serious Xbox-ing to do.