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A resource sector renaissance?   

The feeling on the street is one of growing optimism. Gold prices have risen by 24% in 2016, silver is up 26%, the market is coming to grips with lithium and graphite ‘booms’, and we’ve seen solid rises of 36% for zinc and 66% for crude oil since their early-January lows. There have also been more modest increases for other metals including copper, lead and nickel. The key driver of course remains Chinese demand, but meaningful supply-side cut-backs are now beginning to have a material impact in stabilising prices.

With respect to equities, poor strategic decision-making and overly-ambitious expansion plans caught out most of the world's heavyweight miners. Contrast this however with the high-quality resource juniors in the sector that we're following. These companies have learned to survive on the smell of an oil rag, executive salaries are modest and geared towards performance, directors often have significant personal stakes (hurt money) in their companies and there are achievable growth strategies in place. Smaller companies tend to be more leveraged to strongly-performing commodities like gold, zinc, lithium and graphite.

Real companies with real projects (not the ‘lifestylers’) are gradually able to raise money and explore again, share prices are moving (in a positive direction for a change) as markets react to good news (rather than ignoring it). And nowhere is this better reflected than in the Australian Small Resources Index. 
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S&P Australian ASX

Small Resources Index


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Making Sense of the
Lithium Craze


15-Year Gold Price

Performance (AUD/oz)


Some of our Recent Strong Performers

Pilbara Minerals (ASX:PLS)
*Up 289% since initial coverage in Sept 2015

West African Resources (ASX: WAF) *Up 125% since initial coverage in Sept 2015

Metalicity Limited (ASX:MCT)
*Up 232% since initial coverage in Oct 2015

Oklo Resources (ASX:OKU)
*Up 137% since initial coverage in Nov 2015
  
Gascoyne Resources (ASX:GCY)  *Up 194% since initial coverage in Feb 2016
(*As at 10 June 2016)


Gavin Wendt

FOUNDING DIRECTOR &
SENIOR RESOURCE ANALYST


 Base Metals Outlook:
Is the worst behind us?
Gavin speaks with Bloomber
g



July 12-14, 2016, Frankfurt, Germany


121 MINING INVESTMENT
12 - 13 OCTOBER 2017

HONG KONG


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