Pic: Christophe Burgstedt/Science Photo Library
Mining
China’s emergence from Covid-19 lockdowns and promise to prop up its ailing property sector, where new homes starts tumbled almost 40% through the bulk of last year, has pushed copper to levels not seen since late June 2022.
Copper metal for three month delivery on the London Metals Exchange climbed to US$8912/t overnight, threatening the US$9000/t level in a reversal of the bearish sentiment that overtook the latter part of 2022.
It led a rally in commodities linked to the China narrative, with the ASX materials sector opening the day up 1.81% and iron ore futures rising in Singapore to around US$120/t.
Along with copper, gold also held up as neutral comments from US Fed chair Jerome Powell on the direction of rate rises propped up its US$1876/oz price.
“Copper led the base metals higher as risk sentiment improved over China’s reopening. An early session selloff was also reversed after Powell avoided giving clues on the outlook for interest rates,” ANZ senior economist Adelaide Timbrell said in a note.
“Sentiment was supported by reports of further financial support for China’s economy.
“The PBoC and the banking regulator urged the country’s lenders to provide powerful financial support for the economy. The meeting was said to focus on supporting important property developers and reducing their risks.”
It was battery metals stocks, struggling over the past month, which took the lead. Allkem (ASX:AKE) rose 5.78%, with IGO (ASX:IGO) up 4.13% and Pilbara Minerals (ASX:PLS) gaining 3.88%.
Mineral Resources (ASX:MIN) lifted 2.95% despite Norwest Energy (ASX:NWE) recommending its shareholders reject the lithium, iron ore, mining services and gas company’s bid for its Perth Basin JV partner yesterday, with all four of the ASX’s lithium quad in the winner’s list.
There were big gains as well for copper miner 29Metals (ASX:29M), gold stocks Evolution (ASX:EVN) and De Grey (ASX:DEG) and mid-tier lithium and iron ore plays.
The heat around gas takeover tussles in WA has also risen, with the Rinehart clan’s Hancock Energy saying three of Warrego Energy’s (ASX:WGO) largest shareholders containing 32.6% of the voting rights in the gas minnow had accepted Hancock’s cash offer for their shares.
Hancock is facing competition in the form of a scrip bid from WGO’s JV partner Strike Energy (ASX:STX), chaired by another member of Perth’s upper crust in John Poynton.
Hancock, which claims to have the support of WGO instos Regal Funds Management, Mira LasNubes and Condor Energy Investments and their associates says cash will be paid out to accepting shareholders on its 36c per share bid once a 40% minimum acceptance condition is met.
Strike’s off-market offer of 38.5c per share paid out in Strike scrip opened today. While it sits at a 37.5% premium to Hancock’s 28c a share bid, which knocked Kerry Stokes-backed Beach Energy (ASX:BPT) out of contention last year, it is just a 6.94% premium to the conditional Hancock offer of 36c triggered by the minimum acceptance milestone.
Elsewhere in the large cap mining market, $1.2 billion capped lithium brine developer Lake Resources (ASX:LKE) saw its shares lift after announcing a doubling of the measured and indicated resource at its Kachi brine in Argentina to 2.2Mt of lithium carbonate equivalent to a depth of 400m over 81km2.
Grading 212mg/L lithium (measured) and 178mg/L lithium (indicated) across the salar, a further 3.1Mt LCE is also sitting in inferred resources over 117km2, with Lake saying it remains open laterally and to a depth of 700m.
The upgrade comes a day after Lake hit a milestone, operating a demonstration direct lithium extraction plant at Kachi for 1000 consecutive hours with technology partner Lilac Solutions, producing 40,000l of lithium chloride eluate ahead of New Year’s.
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