Weekly Small Cap and IPO Wrap: When copper turned showstopper

• The Emerging Companies Index (XEC) is up 1.3% up for the week
• In Friday trade the XJO is tracking 0.1% higher, up about 1.5% for the week 
• Tempest Minerals and Recharge Metals lead this week’s best small cap gainers

In Sydney on Friday afternoon, it’s cold, wet and an ill-wind blows in from Mordor. The Emerging Companies Index (XEC) is up around 1.3% for the week and ended March up almost 8%.

In its wake, the ASX200 has gained 1.4% for this week, and some 6% over the last month.

In summation, the week in Smallcapland was all about copper and we were also whacked about the head and body by the government’s FY23 Federal Budget… But first, George Boubouras executive director and head of research at K2 Asset Management has gracefully (not true) accepted the challenge of:

A Macro Summary of the World in Less than One Hundred Words, By George B:

” Markets comfortable with a Hawkish Fed, but Yield Curve to flatten (and invert for periods in the 2-10s). Long bond yields at odds with equities, soft US landing our base case. Aggregate EPS (earnings per share) tends to do well at early stage rate hike cycle & inflationary events. Always risks including persistent price pressures, global trade & supply chain disruptions. Note: higher prices eventually means higher inventories which equals lower future prices. Further, higher participation rate in the labour market due to inflation. Hence soft landing narrative, but risks higher of recession in 2024.” 

 

And stock specific, also By George B:

• We remain overweight commodities, industrials and some diversified financials
• Asian Fund continued to be underweight China (since early 2021)
• Micro/Small Caps: Mixed but exposure to fintech, biotech and some commodity producers

Thanks George, now back to the Budget…

So, the overall feel for this – and I believe I can speak for everyone involved: Australians one and all, taxpayers, economists and public commentators alike – is that Mt Frydo’s budget offers some short-term positive relief for the consumer, but not heaps else.

There’s extra cash but it’s only a mild addition to what’s on in infrastructure and for housing anyway and thusly won’t impact the rate outlook for the Reserve Bank of Australia (RBA).

In the pre-match budget chatter, some commentators expected that the Lamington – the low and middle income tax offset (LMITO) might be extended for another year.

Those planned payments  for 2022 (there’s circa $7.5 billion for circa 10 million of us) will go ahead, but that’ll be it for the LMITO. Instead, a broader range of poorer consumers have been given targeted, one-off cash handouts and some tax offsets worth $1.4 billion and $3.9 billion respectively.

The government also halved the fuel excise for six months, notionally adding $5.6 billion of stimulus, spread across two quarters.

How did this week’s IPOs perform?

Far East Gold (ASX:FEG) is now the newest copper gold explorer to start trading on the bourse following a $12m raising at 0.20c per share. Choosing a great week to go all copper-gold explorer FEG debuted with a gain of more than 30%, joining the lists with six meaty, advanced-stage tenements across Australia and Indonesia, including a +1Moz gold resource at the ‘Wonogiri’ project in Indonesia.

Those gains have been steadily retraced and by Friday FEG is down a few cents on where it all began. That don’t change the mission, with the zone-in on its under-explored mineral resources and cost efficient operations in the Aceh region of North Sumatra.

The board is backed by some stellar diggers –  including chairman and co-founder Paul Walker and Denpasar-based non-executive director Justin Werner – a 20-year mining veteran and managing director of one of the world’s headline companies at the moment – the ~$4 billion Nickel Mines.

The rest didn’t turn up, but Emma Davies – our in-house pre-cog – has a definitive list of them that wish to list next week, right here. And in the clip below, we get a glimpse of both her WFH set up and her approach to workplace communication:

ASX SMALL CAP WINNERS:

Here are the best performing ASX small cap stocks for March 28 – April 1 [intraday]:

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

Well, in-house pre-cog Emma Davies called this one back in February – copper could be the best performing metal of 2022 – and while there’s still a fair bit of ’22 to do, copper killed it this week, thanks to three stunning strikes – and this week’s top three performing small caps, by a country mile:

On Monday, Tempest Minerals (ASX:TEM) surged 265% after making a big copper discovery in its very first hole at ‘Orion’, part of the flagship ‘Meleya’ project in WA.

Tempest, described so beautifully here by Sam is 640% more the company it was on Monday.

Tuesday, saw newly listed Recharge Metals (ASX:REC) hit 300m of copper mineralisation in drilling at the flagship ‘Brandy Hill South’ project, also in WA.

It gained 238% for the day and is up 250% for the week.

Then for the hat-trick,  Culpeo Minerals (ASX:CPO)  made similar moves on Wednesday when it struck the copper motherlode in its very first drillhole at the ‘Lana Corina’ project in Chile.

This explorer listed on the ASX September 10 with a couple of porphyry projects in Chile — ‘Las Petacas’ and ‘Quelon’ — and only entered into an agreement to acquire 80% of Lana Corina earlier this month. Culpeo is up 150%.

ASX SMALL CAP LOSERS:

Here are the worst performing ASX small cap stocks for March 28 – April 1 [intraday]:

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

A bad week for Seafarms Group (ASX:SFG) and it’s fabulously ambitious top end Project Sea Dragon (PSD) – a mad cap tiger prawn farm venture in the far north of Australia.

Unfortunately, we all learned that Project Sea Dragon has been draggin’ it’s tail rather badly. In fact it looks like there’ll be a circa three year delay after a review found the project as it stands poses an “unacceptable risk,” and will need to be scrapped entirely and rebooted from its current shape.

I thought investors took the news pretty well, shares ending a harrowing week just 39% lower.