Monsters of Rock: Materials sector goes hard as iron ore giants lead market higher

Iron ore miners lead ASX materials sector to a near 1.5% gain
Battery metals stocks also ran hard as Azure shares pushed beyond $4
De Grey Mining rose on drill results highlighting the underground potential at its Hemi deposit

The big dawg triumvirate of BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) were all well into the green as the stubbornness of iron ore prices and Chinese bond sales led optimism in the market.

That led the Materials sector to a near 1.5% gain.

Copper prices also surged 1.6% after a show of strength from China’s refiners, who have hit a record high in output with three months of 2023 remaining, ANZ’s Adelaide Timbrell said in a note.

Fetching US$8167/t, the red metal is back above US$8000/t, though it remains well off the record highs of more than US$10,700/t seen in 2021.

But winners were found right across the commodity complex, with lithium players Mineral Resources (ASX:MIN), IGO (ASX:IGO) and Pilbara Minerals (ASX:PLS) all up, while Neometals (ASX:NMT) ran 4% higher after exiting a trading halt to clarify a statement on a new spodumene discovery at the Spargos prospect in the WA Goldfields.

Allkem (ASX:AKE) was the sole laggard among the major lithium stocks as doubts continue to swirl on where investors sit on a proposed merger with US lithium producer Livent ahead of a December 19 vote.

At $8.62 its shares have now almost halved from a mid-July high of $16.73.

Meanwhile, someone willing to pay even more than MinRes and Gina Rinehart has popped up in the trading spree over Azure Minerals (ASX:AZS), which at $4.04 is now paying well beyond Chilean producer SQM’s recent $3.52 scheme offer.

Fingers over at The Australian‘s Dataroom section pointed to Pilbara Minerals, owners of the Pilgangoora mine.

It all begs the question – what will kingmaker Mark Creasy do? He is not only a more than 13% holder of Azure, but also owns the other 40% of the massive Andover lithium discovery in the Pilbara, now valued at well over $1 billion.

De Grey in De Green

Less sparkly was the gold sector, with the All Ords sub-index up a paltry 0.59%.

The yellow metal has retreated slightly since it threatened the US$2000/oz glass ceiling in the immediate aftermath of Hamas’ attack on Israel and the start of Israel’s bombardment of the Gaza Strip.

That safe haven buying has chilled, but there was one stand out goldie today in the form of the hard drilling De Grey Mining (ASX:DEG).

The Pilbara gold hunter confirmed the Tier-1 status of its Hemi discovery with a DFS in September, which projected the 9.5Moz deposit would take $1.3 billion of capital investment to turn into one of Australia’s largest fold mines from the second half of 2026.

It will deliver 530,000ozpa over its first decade of life and 553,000oz across its first five years from a 6Moz reserve at a grade of 1.5g/t.

But work is ongoing to extend and expand that further, with more deep drilling at the Eagle and Diucon deposits today ratcheting up its underground potential.

Extensional drilling at Eagle included strikes of 38.8m at 3.6g/t, 37.7m at 1.8g/t and 67m at 2.1g/t, along with a host of other wide intercepts.

The results extended mineralisation by at least 250m down plunge and 300m down dip at Eagle.

“In addition to potential resource increases, deeper drilling at Hemi will support our conceptual studies into potential underground mining in the future,” De Grey GM exploration Phil Tornatora said.

“RC drilling at Hemi is continuing along the Diucon Thrust north of Crow and extending towards Scooby, aiming to define additional shallow resources.”

Those results will be some to keep a tab on.

De Grey Mining (ASX:DEG) share price today

At Stockhead we tell it like it is. While De Grey Mining and Azure Minerals are advertisers at the time of writing, they did not sponsor this article.