2017’s worst performing ASX small cap resources stocks
It seems mineral sands, iron ore and oil and gas stocks were out of favour with investors this year.
Tanzania-focused mineral sands explorer Strandline Resources (ASX:STA) finished last with its share price tumbling 92 per cent.
The company’s shares dipped to a 52-week low of 4.8c in July after the Tanzanian government made sweeping changes to its Mining Act, including compulsory 16 per cent government ownership of mining companies.
Strandline has since retraced some of its losses back up to 10c per share, but is still down on its 52-week high of 13.2c.
Iron ore and gold explorer Accent Resources (ASX:ACS) has also lost 92 per cent of its value over 2017.
The company has slipped to a 52-week low of 0.6c from 7.5c at the start of the year.
Accent is planning to drill its Magnetite Range iron ore project in Western Australia and is undertaking a “high-level strategic review” of its Norseman gold project. The review is due to be completed in the December quarter.
The share price of oil and gas junior Red Sky Energy (ASX:ROG), meanwhile, has fallen 90 per cent since the start of this year.
The company tumbled from a peak of 5c to a low of 0.3c in July before recovering slightly to 0.5c.
Red Sky has been facing “unforeseeable difficulties” at its Gold Nugget gas project in Wyoming, USA.
Even though the Gold Nugget gas well has shown good signs of gas production and can reach production of over 600,000 cubic feet in some cases, it remains inconsistent due to high pressures, Red Sky told investors recently.
The company is now looking at a revised development approach for the project.
Not all re-listings excite
Copper and zinc explorer Pursuit Minerals (ASX:PUR) has fallen from a high of 32c on its ASX re-admission in late August to a low of 12c.
Pursuit has had several identities in its lifetime, the most recent being Burrabulla Corporation, which underwent a recapitalisation in early 2016.
The company subsequently changed its name and acquired three base metals projects in Queensland and South Australia from Canada’s Teck Resources.
But even news of hits grading as high as 16.64 per cent combined zinc and lead at its Paperbark project in Queensland in late November failed to excite investors.
Mixed bag in 2018
Views are divided on what will and won’t be hot in 2018.
While gold stocks have enjoyed a good run in 2017, the outlook for next year is not as rosy, according to UBS.
“The 2018 outlook for gold has deteriorated in our view,” analysts said in a recent research note.
Rising interest rates in the US and an improving global growth trajectory could see gold struggle in the new year.
“This paints a negative backdrop for gold equities,” UBS noted.
However, resource expert Gavin Wendt believes gold can be the “Commodity Dark Horse of 2018”.
Mr Wendt sees rising interest rates and U.S. dollar weakness having positive implications for gold’s future direction.
“Gold has finished the past three calendar years in the relative doldrums, but burst out of the blocks at the beginning of both 2016 and 2017 — and I believe we’ll see a similar performance during 2018,” he said.
Meanwhile, alumina, zinc, manganese and metallurgical coal are also not favoured by some in 2018.
UBS believes prices have rallied too high on a mix of unsustainable factors. “While bulks prices should retrace, we are more bullish on prices than consensus.”