Is this what winning a trade war looks like?

Chinese sanctions on our wine, coal and lobster pale in comparison to the mammoth prices being paid for Australian iron ore.

In fact, the Aussie government could rake in an extra US$34 billion ($43.6bn) to US$37 billion ($47.45bn) from the Chinese if iron ore prices are sustained above US$200 a tonne, according to Navigate Commodities iron ore analyst Atilla Widnell.

“Political posturing and tensions aside, this is one of the most incredible transfers of wealth between the pockets of the Chinese and Australian governments,” Widnell says.

It eclipses the profits made during the last iron ore boom, which ended in 2013.

“In addition to the record high price of iron ore, the costs for miners are now lower, and China is consuming much larger volumes,” Widnell says.

But the Chinese steelmills are still making a lot of money.  Argus says China’s crude steel output rose to a record high in April as wide profit margins and strong global steel demand drove mills to maximise operations.

There’s no sign of the industry cooling, Argus says, despite the country’s call for lower output in 2021.

Here’s how ASX-listed iron ore stocks are performing:

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CODE COMPANY 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % PRICE MARKET CAP
MDX Mindax 2433 2433 2433 2433 0.076 $ 146,624,304.65
CAP Carpentaria Resources 193 221 255 440 0.135 $ 61,590,503.20
EFE Eastern Iron 30 16 27 364 0.013 $ 6,723,039.16
HAV Havilah Resources 24 40 56 192 0.28 $ 82,694,851.56
TLM Talisman Mining 23 75 104 231 0.245 $ 46,657,096.25
CZR CZR Resources 15 15 7 50 0.015 $ 39,942,264.52
MGU Magnum Mining & Exploration 6 9 265 338 0.175 $ 78,150,954.59
ADY Admiralty Resources 6 -14 36 217 0.019 $ 22,023,559.28
VMS Venture Minerals 4 90 179 700 0.12 $ 152,280,617.55
CIA Champion Iron 3 19 64 242 7.5 $ 3,635,350,057.52
ACS Accent Resources 0 -5 280 660 0.038 $ 17,709,036.75
FMS Flinders Mines 0 -25 8 81 1 $ 168,848,577.00
GEN Genmin 0 7 0.29 $ 81,005,054.17
IRD Iron Road 0 -23 25 338 0.2 $ 157,672,132.20
LCY Legacy Iron Ore 0 -29 88 650 0.015 $ 96,071,077.76
SHH Shree Minerals 0 -12 25 275 0.015 $ 15,153,553.38
SRN Surefire Rescs NL 0 -7 -22 733 0.025 $ 26,331,849.84
BHP BHP Group -2 7 37 61 50.85 $ 146,114,229,142.40
RHI Red Hill Iron -2 90 352 692 0.95 $ 56,884,241.55
RIO Rio Tinto -2 9 31 52 129.82 $ 46,788,091,612.56
MGX Mount Gibson Iron -3 5 30 51 0.95 $ 1,132,550,904.99
HAW Hawthorn Resources -4 -21 -58 -53 0.048 $ 15,675,233.81
MIO Macarthur Minerals -4 -4 -7 130 0.46 $ 64,567,502.10
FMG Fortescue Metals Group -4 14 40 89 23.73 $ 71,124,089,605.80
RLC Reedy Lagoon -5 -14 73 850 0.019 $ 8,930,497.15
AKO Akora Resources -6 -14 0.3 $ 15,367,680.00
SRK Strike Resources -6 28 139 459 0.26 $ 63,019,238.34
MIN Mineral Resources -6 8 62 162 46.19 $ 8,455,371,993.60
DRE Dreadnought Resources -7 32 -4 317 0.025 $ 59,239,002.26
GRR Grange Resources -8 -2 113 127 0.53 $ 596,029,429.47
TI1 Tombador Iron -9 28 144 375 0.1 $ 100,641,506.50
FEX Fenix Resources -10 21 156 439 0.345 $ 156,432,913.20
GWR GWR Group -10 0 88 384 0.3 $ 90,835,932.90
MAG Magmatic Resources -12 33 -8 -37 0.18 $ 40,207,139.10
MGT Magnetite Mines -20 -11 550 6984 0.065 $ 181,711,018.63
BCK Brockman Mining -22 55 96 73 0.045 $ 426,844,678.03
JNO Juno Minerals 12 0.28 $ 29,844,760.22

 

SMALL CAP STANDOUTS

MINDAX (ASX:MDX)

Former micro-cap struggler Mindax languished for two years in suspension but made up for lost time after getting reinstated to the ASX last week.

It spiked as much as 7,500%, before settling at a slightly less mental ~2,430% for the week.

The red hot stock has partnered with a Chinese company happy to front capital for a magnetite iron ore project in the Yilgarn province of WA.

Mindax – which hasn’t hit these levels since mid-2013 – now has a market cap of ~$146 million.

 

CARPENTARIA RESOURCES (ASX:CAP)

Carpentaria is now up 190% since finalising a deal to buy Pure Metal’s 24% share of the Hawsons Iron Project in NSW for 90 million shares.

The shares will be sold by PM by way of off-market transfers to “two or more non-associated third parties”.

The deal should be finalised on or around May 19.

Carpentaria executive chairman Bryan Granzien says the deal will clear the path of obstacles that have held up Carpentaria’s efforts to realise the full value of the world-class project.

“We now expect to be able to do justice to the Hawsons Project and raise the funds necessary to complete the bankable feasibility study then proceed to development of the project,” he says.

 

EASTERN IRON (ASX:EFE)

Tiny $7m explorer Eastern Iron has raised ~$1m, to be used on iron ore ($500,000) and copper ($200,000) exploration at the flagship Nowa Nowa project in Victoria.

Last month, Eastern Iron said it was updating a 2014 definitive feasibility study (DFS) for the iron project.

Eastern Iron reckons a direct shipping ore (DSO) product strategy will reduce the timetable and capital requirements to start production.

“The company is progressing the permitting and approvals process in parallel to ensure a rapid development of the project is possible, subject to a favourable DFS update,” it says.

The DFS update should be completed in the September quarter this year.

 

TALISMAN MINING (ASX:TLM)

Last week, Capital H’s Josh Baker said that the flagship asset of gold-copper explorer Talisman is actually a royalty over the Wonmunna iron ore project, acquired when it sold off the project in 2011.

The project is now owned by miner Mineral Resources (ASX:MIN), which is currently drilling to grow the resource.

“As such, we think there is a strong likelihood that the scope of the deposit will be expanded and able to support a 10Mtpa scale operation for 5yrs+,” Baker says.

“At the current average price for 58% graded ore for CY21 to date (~USD142/t), this implies a revenue run-rate of ~$9 million p.a. from TLM’s royalty.

“Should MIN be successful in doubling the production run-rate asap, it would imply a revenue run-rate of ~$18 million p.a. on the same assumptions, in stark contrast to [Talisman’s] current $37 million market cap.”

Talisman now has a market cap of ~$46 million.

 

CZR RESOURCES (ASX:CZR)

Advanced iron ore explorer CZR is worth up to three times the current stock price, according to a new research report.

Analyst Andrew Pedler values CZR — which owns the low-cost DSO Robe Mesa project in the Pilbara — at 3c a share based on it shipping through Port Hedland.

The value rises to 4.5c in the event that plans to ship through the closer port of Onslow are successful, he says.

CZR is currently trading at 1.5c for a market cap of ~$40 million.