What happened to the most talked about metals and minerals in October?

Investor sentiment for commodities went ballistic, almost across the board.

Copper was back in vogue, rising above US$10,000/t for the first time since May.

The close of US$10,538/t mid-month arrived amid a supply crunch across the base metals complex, sparked by power rationing in China and Europe that has seen several smelters curb production. When it comes to copper, the cupboard is practically bare.

The same could be said for magnesium. China, which produces around 85-90% of the world’s magnesium, is slashing production due to the ongoing power crisis.

Buyers are getting desperate. Magnesium metal prices rose from ~$3,200 per tonne in September to $11,000 per tonne in October 2021.

Potash prices have now soared by up to 300% since the start of the year, sitting above US$700 per tonne (CFR Brazil Spot). CRU Group’s updated Sulphate of Potash (SOP) Price Forecast Analysis says this is a combination of rising demand, poor international crop yields, surging crop prices and margins.

And then there’s lithium, which continues to surprise to the upside. Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.5%) spodumene went off at a record $US2,350/t.

It outshines auction two on September 14, which went off at a then-incredible $US2,240/t to singlehandedly spark a historic 86.5% month-on-month increase for average spod pricing industry-wide. The average price for SC6% cargoes this time last year was ~$US380/t.

 

What were our winners looking for?

The standouts in October were gold, copper, and lithium, which have marginally increased their share of the top 50 month-on-month.

Here are the top 50 ASX resources stocks for the month of October >>>

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop

 

Magnesium mayhem

There are only a handful of current or likely magnesium producers outside China, and even fewer on the ASX.

One of these is Latrobe Magnesium (ASX:LMG), which plans to develop a 3000tpa operation which will convert fly ash from the Yallourn coal operations in the Latrobe Valley into magnesium and a host of other industrial products.

Latrobe still has engineering and other studies to complete before issuing tenders for construction of its plant in January next year but managing director David Paterson said end users facing supply woes out of China were already desperate to get their hands on mag product.

“That’s why we keep on talking about diversity of supply,” he told Stockhead on September 30.

“We’ve had probably at least three or four inquiries a week, probably one a day.”

“We’ve had two today just on can we supply mag at a price, at any price, because they can’t get supply.”

And then there’s formerly sleepy explorer Korab Resources (ASX:KOR) which has been trying to develop, or sell, the ‘Winchester’ magnesium project in the NT for over a decade.

Over the last few months, KOR says it has been approached by two separate groups expressing an interest in developing Winchester.

The latest unsolicited proposal would see the two parties “jointly develop the Winchester quarry where the other party will fully fund the development in exchange for sharing the future profits from the quarry”.

The company is also in discussions with magnesium metal users and magnesium buyers, including car makers (Fiat and Daimler), and aluminium/magnesium alloy producers.

 

Fertiliser stocks grow on investors

It’s a good time to be in the fertiliser game.

In China – a major producer — some provincial governments have requested fertiliser producers and traders to stop exports, causing a phosphate price spike to $643.8/mt for di-ammonium phosphate (DAP) and $147.5/mt for phosphate rock in September.

Potash prices are also going mental, and there’s a bunch of Aussie stocks looking to cash in.

Phosphate explorer Centrex Metals (ASX:CXM) re-rated after signing an offtake and marketing agreement with Samsung C&T, one of the world largest fertiliser traders.

Gold focused explorer Avenira (ASX:AEV) has a phosphate project in the recesses of its portfolio. This project, called ‘Wonarah’, is probably the reason the share price has jumped 200% over the past month.

German based South Harz Potash (ASX:SHP) recently signed a drilling contract for the first 665m deep confirmatory hole at its ‘Ohmgebirge’ Mining Licence area.

The confirmation drillholes will allow SHP to upgrade current inferred resources to indicated within the mining licence area, thus allowing the release of a Scoping Study in Q1 CY22.

And Aguia Resources (ASX:AGR) announced it had presold 30,000 tonnes per annum of natural phosphate fertiliser from the ‘Três Estradas’ Phosphate Project (TEPP) in Rio Grande do Sul, the southernmost state of Brazil.

The project, which will cost just $8m to build, is expected to produce 306,000tpa over 18 years following a three-year ramp up.

 

The lithium juggernaut rolls on

Another good month to be a lithium stock, big or small. There were 12 of them in October’s top 50 this month.

Australia’s next lithium producer Core Lithium (ASX:CXO) officially started construction of the 197,000tpa ‘Finniss’ project in the Northern Territory. First production of lithium spodumene concentrate is scheduled for Q4 2022, it says.

Popular near term miners Lake Resources (ASX:LKE) and Liontown Resources (ASX:LTR) marched closer to development.

At the junior end, there was a frenzy of lithium project acquisitions, and investors loved it.

Gold focused QX Resources (ASX:QXR) officially acquired a lithium project in the Pilbara, the hard rock capital of the world.

Wildcat Resources (ASX:WC8) kicked off drilling at the priority ‘Red Panda’ lithium target, part of a new JV option agreement announced late September.

The latest stock to dive into lithium is Critical Resources (ASX:CRR), formerly Force Commodities. CRR will pay ~$3m in cash and shares, plus $3m in milestone payments for the ‘Mavis Lake’ lithium project in Canada, where recent drilling hit thick high grades like 26.30m at 1.70% Li2O from 111.9m.

CRR has until January 4 to complete due diligence and acquire the project.