The answer to the above question is simple- it’s the reporting season. The ASX-listed companies are gearing up to release their respective earnings report, as the market experts and investors await the performances and future momentums that companies would undertake. Quite a lot of investing decisions occur, based on the recent updates provided by the companies.
Adhering to this trend, we have picked the two stocks from the fascinating Metals and Mining sector of the Australian trade market, which have recent updates that might be of interest in this season of stock indulgence.
Before diving into the stocks, let us get a gist of the Australian metals and mining sector:
Metals and Mining in Australia:
Known as ‘The Lucky Country’ for all the right reasons, Australia has privileged wealth as its soil is home to a hoard of raw materials. The Australian mining industry is amongst the country’s most well-established sectors, with its history dating back to the gold rushes of the 1850’s. A major contributor to the Aussie GDP (~7 per cent), Australia is the fourth largest mining country in the world, after China, the US and Russia). Mining is export-oriented in the country. Australia features amid the top 5 international producers of minerals like lead, zinc gold, iron ore and nickel and possesses the largest uranium and the fourth largest black coal resources worldwide, respectively. The country is home to some of the world’s largest and most ambitious mining projects.
Optimistic Outlook of Metals and Mining:
Besides being an attractive destination for investors, Australia has world-leading expertise in resource extraction and processing, high-tech engineering and renewables research. The Global demand for Australian resources has increased in the recent years and includes minerals which are used in a range of emerging high-tech applications across a variety of sectors like renewable energy, aerospace, defence, automotive (given the EV Revolution), telecommunications and agri-tech. In 2018-19, the resource and energy commodity exports are anticipated to generate over $264 billion, which would be more than two thirds of the goods exports.
By 2019–20, Australia could account for around 80 per cent of the global lithium supply from hard rock deposits. There is an anticipation of a zooming 68 per cent increment in the cobalt consumption of the world forecast between 2015 and 2025. In 2017, Australia produced ~4,970 tonnes, which was the world’s second largest economic demonstrated resource of cobalt.
Major Critical Mineral Operating and Developing Mines in Australia (Source: Government Report)
Given this profound and promising backdrop of the Metals and Minerals Space of Australia, let us look at the two stocks- POS and ESR:
Poseidon Nickel Limited (ASX: POS)
Company Profile: A nickel sulphide development and exploration company, POS has 3 operational projects in Western Australia. The company’s strategy is on the recommencement and exploration of its established nickel operations, with acquisition as a critical element of this strategy. POS owns the Windarra Nickel Project, the Black Swan Nickel Operations and the Lake Johnston Nickel Operations.
Diggers and Dealers Site Tours Presentation: On 5 August 2019, POS conducted a Site Tours Presentation, stating that the Black Swan Operations were ready to restart in less than 9 months at nearly 8,000t nickel p.a. The nickel price environment was supportive in the EV soared demand era, with stocks at five year lows and market into deficit, with the nickel price up by 34 per cent on a YTD basis.
At the Lake Johnston, New discovery was made at Abi Rose and significant exploration upside. At the Windarra Project, Cerebrus deposit of 69,000t Ni with mine plan was found, with exploration being upside.
Nickel Prices (Source: POS’s Report)
Silver Swan Resource Upgrade and RC Drilling: On 5 August 2019, POS released an update on the Silver Swan Restart Resource, indicating 10,130 tonnes of nickel metal at a grade of 9.4 per cent Ni. The indicated and inferred Resource increases was up by 30 per cent, to 16,030 tonnes of nickel metal at a grade of 9.5 per cent Ni. Besides this, the underground RC drilling had begun, after awarding a 2,500m trial Underground RC drilling program to MDU, below the Black Swan Open Pit to assess potential underground resource.
The progressive development of the Silver Swan resource (Source: POS’s Report)
Stock Performance on ASX: After the end of the trading hours, on 5 August 2019, POS’ stock was valued at A$0.040, down by 4.762 per cent relative to its last close. With a market capitalisation of A$110.99 million, the stock had 2.64 billion outstanding shares. In the last six months, POS’ stock has generated a return of 7.69 per cent and the YTD return stands at -2.33 per cent.
