Saw this one today on twitter Invast Blog Small Cap Favourites: Panoramic Resources Limited June 9, 2016 It’s been a long time since we looked at small, single producing Australia mining stocks. But we think it’s time to start running the ruler of the names that have survived. Basically all of the stocks in the sector have been priced for collapse. Some will, others won’t. The ones that survive will undergo a rerating in the coming months and years and this can be a great time to start finding and building that list. PAN is one of those names that remains stuck – a victim of lower nickel prices. We don’t know when the underlying commodity will rebound, but at some stage it will, because of its use in industry.
A recent Bloomberg article noted nickel demand from the auto industry is set to rise as much as threefold in five years as output of electric and hybrid cars gathers pace, according to Russia’s largest producer of the metal. Electric and hybrid vehicles are increasingly becoming a low-cost alternative for consumers as their batteries — which use nickel — get cheaper and more efficient. That may aid a recovery in the market for the metal after prices slumped because of oversupply in the stainless-steel industry.
PAN is one of the largest domestic Nickel producers, has recently raised capital to sustain its operations, shed staff and curtailed production in order not to deplete its ore base until prices recover. The current market cap of around $50-60m and strong backing from one of its key shareholders – Zeta Resources – means it has nice upside optionality when nickel prices do rebound. It’s one of the few resources stocks on our list.
Invast is very well placed to bring you some huge opportunities in the coming months. Execution costs for ASX stocks are 0.06% (6 basis points), which means for a trade with a notional exposure of AUD $10,000, the applicable commission is only AUD $6.00.
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PAN Price at posting:
10.5¢ Sentiment: None Disclosure: Not Held
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