AFTER a sluggish June quarter, miners will be keen to reset for the 2018 financial year. MNN looks at the stocks to keep an eye in July.
Far East Capital director Warwick Grigor noted that the end of FY17 was the opposite to 12 months ago.
“Last year we were still riding the enthusiasm of the return to favour of the mining sector,” he said in a note to clients over the weekend. Grigor said there was nothing on the fundamental front to inspire much optimism right now.
“The Metals and Mining Index is continuing with its downtrend but with a little ray of hope that it might be testing this trend,” he said. “A number of the individual company charts are showing signs of having exhausted their downtrends, for the time being at least.
“They have started to move sideways through the trend lines of immediate downtrends, which could be the start of a turnaround. A number of gold producers have completed their correction patterns (short term downtrends) and recaptured longer term uptrends.
“This is an early buy signal that augurs well for the next few months provided that the gold price itself does not collapse.”
Outside gold, RBC Capital Markets said last week that valuations for base metals and diversified miners had become more compelling.
“We remain constructive on the near-term outlook for China and believe continued infrastructure spending could result in better than consensus demand levels for commodities in H217, especially in steel and iron ore,” it said.
“Gold is entering the seasonally strong period in Q317, with the price resilient following the Fed rate hike in June, and real rates trending lower.”
Independence Group, South32 and Northern Star Resources are RBC’s top Australian picks.
Another positive sign is a renewed resurgence in initial public offerings.
While the flood of IPOs in late 2016/early 2017 seemed to subside of late, the floodgates have reopened.
Nusantara Resources had almost raised the A$15 million it was seeking before its offer even opened, so the Indonesia-focused company looks like sure thing to list by the end of the month.
American Pacific Borate & Lithium is planning to list by mid-month after a $12 million IPO.
Western Australian explorers Bryah Resources and Galena Mining are both hoping to close IPOs this month.
Klaus Eckhof’s Congo-focused explorer Huntsman Resources withdrew its $4.5 million IPO earlier this year, but he and business partner Nigel Ferguson have rebadged the company as Okapi Resources, and lodged a prospectus for a new $4.5 million IPO last week.
Niuminco Group is listing its subsidiary TNT Mines via a $5.5 million IPO.
Gold execs Ian Murray (Oasis Gold) and Allan Kelly (Riversgold) are also hoping to get new ventures up and running. Meanwhile, a recapitalised Attila Resources should relist this month as New Century Resources after completing the acquisition of MMG’s Century assets.
Gascoyne Resources will be looking to wrap up financing early this month, with the process delayed by improving economics around its Dalgaranga gold project.
Also in WA gold, Musgrave Resources will release a high-grade resource for its Lena and Break of Day deposits by mid-month.
Sheffield Resources is confident of being granted a mining lease for its Thunderbird mineral sands project in WA.
A feasibility study for Tawana Resources’ 50%-owned Bald Hill project will be released this month.
Novo Lito (formerly Dakota Resources) remains in suspension while it confirms the status of its rights to its flagship Sepeda lithium project in Portugal.
The company said it will pursue the matter in the courts if required, but hopes to be reinstated to trading by July 10.
And finally, we will announce the final nominees for our inaugural MNN Awards tomorrow, with winners to be announced mid-month.
AYA Price at posting:
19.5¢ Sentiment: Buy Disclosure: Held
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