Diggers & Dealers: Your ultimate guide to the stocks to watch at Australia’s biggest mining conference
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Tim Treadgold is a Perth-based journalist who has been covering the resources sector for more than 40 years.
BHP, a company which once shunned the Diggers and Dealers forum, is likely to be a popular attraction when Australia’s top mining conference kicks off next week in the WA gold capital of Kalgoorlie.
Once a rowdy affair fueled by too many lonely men in a town with a pub on every corner, the event was treated as being below the standing of international mining companies such as BHP and Rio Tinto.
Times change and Diggers has cleaned up its image, to the annoyance of hard drinkers and night owls.
But the more serious tone, and a steady increase in the number of women attending what was once a boy’s outing, means that it is attracting international attention, even from investors interested in the technology metals needed to power electric vehicles.
Nickel, a metal that was once an expensive embarrassment for BHP, has become one of its most interesting commodities thanks to its extensive use in lithium-ion batteries which is why Eddy Haegel, president of BHP Nickel West, should be speaking to a packed house late on Monday.
What Haegel has to say will be followed carefully by every investor with an interest in small nickel explorers and miners because BHP is expanding its production of nickel sulphate – a compound in growing demand from battery makers – and that means BHP needs more ore to feed its processing facilities.
The production of specialty nickel products at BHP’s Kwinana refinery south of Perth is creating opportunities for small miners such as Mincor which is the process of renewing an ore supply deal with BHP.
Reviving Nickel West has been a remarkable achievement, albeit one that started out as an essential investment to avoid an estimated $1 billion cost in cleaning up 50-year old mine and mineral processing sites.
By keeping its nickel business alive BHP has laid the foundations for a widespread revival of nickel mining in a region of Australia best known gold production.
While nickel promises to be a prominent topic at Diggers, the major theme at a conference in a city built on gold will be gold.
Roughly half the companies with speaking slots have gold as their primary interest, with the other half a broad mix of other commodities, including potash, rare earths, uranium, iron ore, copper, graphite and lithium.
Here are the stocks to watch, before and after they have their 25 minutes of fame in the Goldfields Arts Centre.
Independence Group (ASX: IGO): A successful nickel and gold producer with growth ambitions but also a company which might have run as far as it can this year after a 55% share-price rise since January. The consensus price tip from investment banks is for a 12% price correction over the next 12 months, setting a challenge for the company’s speaker at Diggers, managing director, Peter Bradford.
SolGold: An odd fish in that it is officially Australian, but only listed in London and Canada and with its best assets in Ecuador where it is chasing world-scale copper and gold deposits. Despite its high profile and strong following, SolGold has not thrilled investors this year with a share price that has fallen on the London stock exchange by 20%. Investors will be hoping for good news from the latest round of exploration.
Bellevue Gold (ASX: BGL): A local darling thanks to its success exploring its namesake mine near the WA nickel-mining centre of Leinster. The major attraction is the high grades of the material reported from drilling, and a strong following among gold bugs who have lifted the stock by 30% since the start of the year.
Kalium Lakes (ASX: KLL): Arguably the most advanced of a small group of emerging potash producers, a relatively new industry for Australia but one with impressive growth potential given the crop enhancing qualities of the fertiliser. A recent fund raising has set the stock on track to win the potash race against rivals such a Salt Lake Potash, Agrimin and Danakali.
Dacian Gold (ASX: DCN): One of the big disappointments of the year thanks to a failure to meet its own production target as well as suffering a cost blow-out, Dacian is in repair mode, setting more achievable goals and while the share price is down 70% since January, its latest price of 82c is well above the bottom of 38c reached in early June.
Sandfire (ASX: SFR): One of the mining industries genuine success stories of the past decade, Sandfire has become a stock in transition as its flagship Doolgunna copper and gold mine runs down and a series of development options are considered. A share price which has barely moved since the start of the year indicates the uncertainty associated with the company’s next move.
Kirkland Lake (ASX: KLA): A Canadian goldminer which is showing Australians how to succeed in the historic mining districts of Victoria where it has redeveloped the Fosterville mine. When combined with the Macasssa mine and other assets in Canada the company is on track to be a one million ounce a year producer.
Nickel Mines (ASX: NIC): Thinking outside the box has turned Nickel Mines into a remarkable success story for the way it has bypassed the traditional Australian approach to nickel and embraced a Chinese/Indonesia method of mining low grade ore in Indonesia, part-processing the material and delivering it directly in a Chinese owned stainless steel plant, generating handsome profits and strong share price.
Roy Hill. You can’t buy shares in this iron ore miner because it’s controlled by Australia’s richest woman, Gina Rinehart. What every delegate at Diggers will want to hear is just how profitable the project has been this year thanks to its combination of high-grade ore and a sky-high iron ore price.
Gold Road (ASX: GOR): Ten years ago, no-one took much notice of Gold Road and its hunt for gold on the eastern extremity of WA’s goldfields. They are today, because the company has re-written the geological handbook, introduced a skilled South African partner to do the mine development while it pushes on with the hunt for more gold.
New Century Resources (ASX: NCZ): Once a star because of the promise contained in a plan to re-work the tailings of the once-rich Century mine in Queensland, New Century has struggled to deliver with a limping share price and a band of followers hoping for some good news.
Syrah Resources (ASX: SYR): Another one-time high-flyer which has struggled to deliver on its promise of becoming a world-class producer of graphite, a mineral which has been heavily sold-down like other battery metals in an over-supplied market.
Evolution Mining (ASX: EVN): One of the real success stories of Australian gold mining in the last 20 years, Evolution has just reported a bumper June quarter of higher-than-expected gold production (194,886 ounces) at a lower-than-expected cost ($A1213/oz). Jake Klein, Evolution’s boss, will have a very attentive audience at Diggers, especially if he expands on his recent comments about the high gold price potentially causing some people to “lose their heads”.
Mount Gibson Iron (ASX: MGX): A fabulous revival story thanks to its re-development of the once-flooded iron ore pit on WA’s remote Koolan Island, Mount Gibson is fast becoming a fat cash-box as it harvests the last of the super high-grade ore in the project and looks for something else to do. That next something is what investors would like to hear more about.
Northern Star Resources (ASX: NST): A rival to Evolution for the title of best performing gold stock of the past decade, Northern Star has a devoted band of followers who have enjoyed every deal the company has made on its trip from penny dreadful status nine years ago when it was trading at 6c to its latest price of $13.41 as rise of 22,250%. Investors want more but that’s a hard act to follow.
For anyone who can’t make it to Kalgoorlie, and it is a long way even from Perth (and not very comfortable once you get there) here’s a link to the official program.
Bear in mind that every ASX-listed company which delivers a presentation will be filing it at the stock exchange shortly before delivery – so you can follow the formal part of proceedings if not the sideline frolics in the evening.