2017’s best performing small cap resources stocks

Cobalt clearly dominated this year as investors continued to get excited about battery metals.

Collerina Cobalt (ASX:CLL) led the charge with massive gains of 1400 per cent since the start of 2017. The top five gainers were all in the battery metals space.

Another standout performer in the battery metals space, also with a 1400 per cent gain to December 12, has been Klaus Eckhof’s AVZ Minerals (ASX:AVZ).

AVZ shares rocketed on the back of news in September that the company had the longest pegmatite intercept ever reported from its 60 per cent-owned Manono lithium project in the Democratic Republic of the Congo.

Pegmatites are rocks formed from lava or magma that often contain rare earth minerals and crystals. They are the primary source of lithium.

The company, which now has a market cap of nearly $400 million, has now started drilling to find out exactly what it is sitting on.

Gold stocks have also been in favour in 2017, with Draig Resources (ASX:DRG) a standout on a share price gain of 809 per cent.

The company hit a new peak of 30c in late November after announcing it had picked up more ground next to its Bellevue project in Western Australia.

Interest in nickel started to pick up this year, with companies like Resource Mining (ASX:RMI) notching gains of 750 per cent.

The company, which hit a 52-week high of 7.3c in early November, has been sitting on its Wowo gap nickel laterite project in Papua New Guinea until the market improves.

Resource Mining was pinged twice by the ASX for its spiking share price in the second half of the year, but could not explain the increased trading in its shares.

High-purity alumina (HPA), meanwhile, caught the eye of investors, with one player — Hill End Gold (ASX:HEG) — up 700 per cent since the start of the year.

The company hit a 52-week peak of 23c earlier in December, up from a low of 2.5c, after announcing a board restructure to better position itself for the development of its HPA project.

HPA, which is used as a feedstock to make aluminium, has a rapidly growing market in light emitting diodes and as a separator in lithium-ion batteries.

IPOs outperform

There were around 30 companies that listed on the ASX throughout the course of 2017 that are not included in the tables of winners and losers.

The average return from these newly minted players was roughly 97.8 per cent, a good indicator the tide has turned for the resources sector.

“I think people are starting to back the explorers a bit more,” David Boyd, managing director of recent float Carawine Resources (ASX:CWX), told Stockhead last week.

“We’ve seen it over the last six months, there’s been quite a few recent successful floats. It is a bit easier to get companies away now compared to 12 months ago.”

Carawine was spun out from mineral sands explorer Sheffield Resources with the company’s secondary gold and base metals assets.

Pilbara-focused zinc, copper and gold explorer Tando Resources (ASX:TNO) made its debut in early November, hitting a high of 42c — more than double its 20c initial public offer price — on its very first day on the bourse.

State Gas (ASX:GAS) is up 85 per cent since it lit up the boards in October.

2018 will be ‘energy hungry’

While demand for battery metals is set to continue for some time, the energy commodities such as uranium and oil could also get a run in the new year.

“As you see the global economy continue to emerge like it is currently and economies such as Europe that have been in the doldrums for some time, any recovery is going to be energy hungry,” Tim Weir, executive director of Precision Funds Management told Stockhead.

This is good news for oil and uranium.

UBS has raised its 2018 price forecast for Brent oil to US$60 per barrel from US$55 per barrel previously.

Meanwhile, the uranium price is moving toward a re-rating, according to some industry commentators, after years under pressure following the nuclear disaster in Fukushima, Japan in 2011 that forced the closure of all 48 of the country’s reactors.

The price is edging back up to about US$25 ($32.68) per pound from around US$20 per pound in June. Prior to the Fukushima disaster, the uranium price was well into the US$70 per pound range.

In late November, Japan approved the restart of two more of the idled reactors. Five reactors have so far resumed operation and a further 12 have received the regulatory green light to come back online.

Uranium is ‘here to stay’

“I just think that uranium as an energy source is not going away and you just look at the amount of commitment the likes of China have got to nuclear,” Mr Weir said. “It’s a sector that I think will actually surprise on the upside in 2018.”

China has 37 nuclear power reactors in operation, about 20 under construction, and more about to start construction. The Asian powerhouse is pushing for a 70 per cent increase in its nuclear power capacity to 58 gigawatts-equivalent by 2020-21, rising to 150 GWe by 2030.

Fat Prophets analyst David Lennox is also “very comfortable” with where energy prices are expected to be in 2018.