Ann: Presentation Noosa Mining Conference, page-41

Little mention this morning on rising stars:

Australia, which lacks a deep tech-sector, largely dodged the fall of market darlings such as Alphabet, Microsoft and Meta caused by investor concern about the over-promoted profit-making potential of artificial intelligence (AI).The closest Australian connection to the U.S. slide was a heavy fall by electric vehicle maker Tesla which dropped by 12% in another sign that EV sales have stalled, which could have a knock-on effect on Australian lithium miners.But whether local lithium stocks will fall much further is probably the most interesting question because most are at the bottom, or close to it, which means it might be time to start rummaging around in the bargain basement.Older investors who have experienced earlier market corrections know that means there are high quality stocks sold down in some cases to their cash backing, a sort of babies with the bathwater event.A bit of homework is required to find the bargains but a starting point is to recognise that there are more than 500 companies listed on the ASX with a market value of less than $10 million, and 330 of those have a value of less than $5 million.Without giving investment advice (though there are a few suggestions at the end of this report) it’s worth looking back to earlier corrections and the bounce which followed, delivering windfall gains of 50% and more as quality stocks were eventually recognised.The bargain basement theory gained strength yesterday when iron ore billionaire and energy investor Gina Rinhart outed herself as the buyer of a large swag of shares in sold-down rare earth miner, Lynas.Already sitting on a 5.8% stake in Lynas, Rinehart snapped up another 1.3%, or 12.3 million shares costing around $74 million at an average price of close to $6, to emerge with a 7.1% interest.The Lynas stake can be added to her other rare earth play, Arafura Rare Earths, which this week signed up for a debt package of more than $1 billion for its Nolans project in the Northern Territory.The debt and a small capital raising knocked the Arafura share price down by 8% to 17c while African rare earth hopeful Peak added 1.5c to 20c and a new rare earth float Axel bombed on debut with its 20c shares trading down to 13c.But, in keeping with this week’s theory about a bargain basement developing, its worth considering that Lynas shares have fallen from more than $11 two years ago to a low in March of $5.50 – to now be in recovery mode, with Bell Potter tipping a future price of $8.50 while Macquarie sees a target of $6.60.Morgans, a mid-tier broking house, latched onto the bargain basement theme early in the week with a research note focused on lithium stocks where heavy selling has “uncovered value” in companies such as Pilbara Minerals and Mineral Resources.Chinese demand for EVs and the battery metals they consume is the key to Morgan’s argument which assumes lithium prices will remain subdued in the near term but with an inevitable recovery.Pilbara, which this week fell to a 12-month low of $2.78 despite reporting strong June quarter production, is expected by Morgans to rise back to $3.50 while Barrenjoey, a well-connected boutique bank, is on the same page albeit with a lower price target of $3.10.Other banks are more cautious. UBS believes a lithium revival is well into the future, sticking with a sell recommendation on Pilbara and price target of $2.50. Morgan Stanley has $2.75 pencilled in and Citi has $2.90.Mineral Resources, which is heavily exposed to iron ore and lithium, had a tough week as the iron ore price dipped below US$100 a tonne on the Singapore Commodities Exchange, dragging its share price down to a 12-month low of $51.32, well below Morgans target price of $69.The big news in iron ore was the remarkable admission by Fortescue Metals Group that it had dived too deeply into the uncertain waters of green hydrogen, unveiling widespread staff cuts and spending cutbacks, just before reporting stronger-than-expected June quarter iron ore production.The combination of iron ore and hydrogen news, when mixed with the volatile personality of the company’s founder and chairman, Andrew Forrest, makes Fortescue a tricky stock for investors, who struggle with mix of assets and worry about the high rate of staff turnover.On the market, as Fortescue dominated mining sector news flow, the company’s share price edged closer to its 12-month low of $19.28 reached last September with the latest price of $20.33 a fall of 70c for the week as investors digested news in the June quarter report that included a warning that costs continue to rise.Overall, the Australian market this week slipped lower by just 1%, weighed down by concern about events in the U.S. where the Presidential race has tightened, making it more difficult than ever to work out the economic direction of the country next year.Gold stocks were caught in the backwash of a falling gold price, which dipped to US$2372 an ounce after touching US$2461/oz last week. The broad metals index, burdened by lower prices for copper and iron ore, lost 4.5%.Spartan Resources was the best of the gold stocks with a rise of 22c to $1.27 after reporting a 47% increase in the resource base at its Dalgaranga project in WA.Other gold news and market moves this week included:Catalyst Metals, up 11c to $1.87 as interest grows in its flagship Plutonic project in WA with CG Capital Markets initiating coverage with a buy tip and price target of $2.60.Rox Resources unveiling a positive pre-feasibility study into its Youanmi project in WA but slipping 1c lower to 14c.De Grey Mining was also 1c weaker with a fall to $1.20 despite growing optimism in its Hemi project and a $2.45 price target from CG Capital Markets, andRegis lost 16c to $1.74 after releasing a positive definitive feasibility study into its McPhillamys project in NSW which earned it a buy tip from Bell Potter and a price target of $2.70.Copper stocks held up well in the face of a US20c fall in the copper price to US$4.04 a pound.Sandfire, which reported solid June quarter production, added 6c to $8.20, and earned a buy tip from RBC Capital Markets which sees the stock rising to $11, and 29Metals rose by 1c to 37 with RBC tipping a future share price of 60c.Metals Acquisition reported slightly better than expected June quarter production but fell by 56c to $19.04 even as Moelis Australia gave the stock a buy recommendation and price target of $23.Other news and market moves this week included:Iluka Resources, down 40c to $6 after what analysts called an OK June quarter production report which lacked an update on the company’s rare earth ambitions which might require additional government funding support. UBS sees Iluka rising to $7.05.West African Resources fell by 3c lower to $1.41 after strong gold production in the June quarter. Macquarie reckons $1.90 is the price target, andBoss Energy lost 15c to $3.61 after releasing its June quarter report which said the company was on track to meet its 2025 production target of 850,000 pounds of uranium.As a final comment and thought starter, here is that list of stocks which appear overdue for a price boost after being sold down in the bear market of the past 12-months: Sunstone. Develop. Nimy. Rox. Ausgold. Astral. Caravel. New World. Patriot. Orion and Stavely. Even if you’re not buying, they are at least worth watching.