Ground Breakers: Labs are stuffed full of drilling samples, which is good news for ALS
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It has become a common complaint from junior mining companies, following the recent surge in capital raisings and drilling activity.
You send your samples off to the labs and, like a date that ends on an open-ended note, it feels like you may not hear from them again.
That’s good news for the mineral assaying labs though, who are living their best life playing the field right now.
ALS (ASX:ALQ) is a case in point. It just reported a 22.9% increase in revenue from continuing operations to $1.03 billion in the first half of 2022.
NPAT is up 57.7% to $127.1 million, exceeding its AGM guidance of $115-125 million for the half. That was driven by life sciences and, you guessed it, commodities.
ALS’ underlying EBIT margin of 29.9% is some 519 basis points higher in geochemistry, with sample volumes up 46% on the same six month period as in 2020.
Solid margins saw commodities generated $114.6 million in underlying EBIT, a 66.6% increase on the $68.8m produced in H12020. ALS says it is planning to increase its geochemistry capacity by 15% by the end of 2022.
“All three Life Sciences businesses delivered double-digit organic growth as volumes surpassed pre-pandemic levels,” ALS managing director Raj Naran said.
“The Commodities division continues to benefit from the strong commodity cycle with Geochemistry in particular, seeing strong sample volume growth from both major and junior mining clients as it capitalises on its market leading position.”
Stronger US economic data and hawkish comments from St Louis Fed president James Bullard proved a double whammy for gold, taking some of its shine and knocking spot prices by around half a percent to US$1851/oz overnight.
Gold miners buoyed by a week of solid price rises threatening a breakout have gone into their shell again, with Northern Star (ASX:NST) off 2.10%, Evolution (ASX:EVN) down 2.54% and Newcrest (ASX:NCM) down 1.71%. Mid-caps are following a similar trajectory.
On the positive side of the ledger, $1.9 billion capped lithium explorer AVZ Minerals (ASX:AVZ) has continued its climb unassisted by any news of note.
AVZ, which said in September it had secured China’s Suzhou CATH Energy Technologies as a cornerstone investor for its Manono lithium and tin project in the DRC, is up 71.43% over the past month and 275% since May.
Indonesian nickel pig iron producer Nickel Mines (ASX:NIC) was up 4.59%, after saying its 80%-owned 36,000t Angel nickel project is running ahead of schedule.
First NPI production is due to take place in the first quarter of 2022, followed by first sales in the June term.