ASX small caps are near a 10-year high as junior miners launch new projects

The ASX Small Ords index — a measure of small cap stocks — is at a near 10-year high.

The index gained 1.2 per cent to 2917.4 on Thursday — close to its highest level since August 2008. (See graph below).

While some small stocks have experienced wobbles this month, mining stocks in particular are hoping for share price growth as new projects come to fruition following a recent increase in investment.

The average value of mining projects has doubled among junior explorers over the past three years, according to research house Austex Mining.

The number of exploration projects has increased by 60 per cent over the past 19 months, Austex boss Rob Murdoch said yesterday at the Gold Coast Investment Showcase, where 30 emerging ASX-listed companies have been sharing their plans with investors this week.

Mr Murdoch pointed to “increased activity and increased demand for cash” among junior resources companies.

The ASX small caps index (green) has outperformed the large cap ASX200 (red) and All Ords (blue) over the past year. Source: Yahoo

Jon Dugdale, boss of graphite play Peninsula Mines (ASX:PSM), said he saw growth potential among junior miners in coming months, given many have transitioned from planning to project launches in the past year.

Many smaller mining stocks are just getting their teeth into projects that have been in the pipeline for years, Mr Dugdale said at the Gold Coast conference.

“Momentum has built through this period [since 2016] where people have started raising funds,” he said.

The ASX Small Ordinaries index (AXSO) is close to its highest point in ten years.

“A lot now are actually getting to the point of adding value.”

A Reserve Bank bulletin on business investment noted yesterday that “the drag from the mining investment boom is close to an end and there are also signs of activity recovering in the states that are most exposed to mining activity”.