Six months is a long time in anyone’s investment calendar – unless you are Warren Buffett – and few are likely to have picked that a greenfields zinc-lead discovery and a great brownfields copper find were the brightest stars in the Investor Insight 20 portfolio in the second half of this financial year.
With the tax deadline for most just days away, it is time to review the portfolio of 20 stocks at this rather arbitrary line-in-the-sand moment.
And a few trends stand out.
Apart from the outperformance of Zenith Minerals (ASX: ZNC), whose share price has more than doubled since December 31, and Aeris Resources (ASX: AIS), which almost doubled in value, it is the exploration and near-term development outlooks in key commodities that are the most promising.
Not always is this rosy outlook captured by the sharemarket.
However, any periods of price weakness – whether in between exploration news, the lull of headlines during the project study and development phase or merely see-through exposure to a commodity price that has taken a breather after a strong run – the past six months have presented opportunities that should give the savvy investor confidence in maintaining a balanced portfolio that offers stability as well as tremendous upside.
And a bit like Forrest Gump’s box of chocolates, a good portfolio should include not just gold and copper but also nickel, rare earths, lithium, oil (until we stop driving cars), exposure to strong economies and a few potential surprise packets.
The Investor Insight 20 dropped about 4% in value over the past six months, reflecting that the outperformance of some stocks was offset by weakness among others.
Put in context, a $200,000 cash investment on January 1 in the Investor Insight 20 would today be worth $195,890 – in contrast, a similar investment in the S&P-ASX All Ordinaries would be sitting at $208,999 while the safest bet of a six-month term deposit in Australia’s largest bank would have grossed a payout of $200,200.
It is doubtful that Warren Buffett has money tied up in the Investor Insight 20 though one of his most famous sayings firmly applies here: “If a business does well, the stock eventually follows.”
And for the Investor Insight 20, from A to Z, this could well be on the cards as we move into the second half of calendar 2021.
Aeris Resources (ASX: AIS; last trade 19.5¢): The acquisition last year of the Cracow gold mine in Queensland added diversity to Aeris’ core focus on the Tritton copper operation in NSW. But it is favourable copper market sentiment – and Aeris’ ability to maximise interest with the excellent Constellation discovery at Tritton – that has put a rocket under the company’s share price. All eyes are now on what Constellation can deliver.
Artemis Resources (ASX: ARV; last trade 5.5¢): The explorer suffered a setback at its Carlow Castle gold-copper-cobalt project in the Pilbara with regards to preliminary resource calculations, which did not mirror the strong drilling results delivered. Carlow Castle remains a high-value prospect though investors, including the newest substantial shareholder Jupiter Asset Management, are eagerly awaiting the next round of drilling at Artemis’ other priority – the Paterson Central project right next to Greatland Gold’s Havieron world-beater.
BMG Resources (ASX: BMG; last trade 4.9¢): A relative newcomer in its latest incarnation as an explorer at three of Western Australia’s top gold addresses – the Invincible project in the Pilbara, Abercromby near Wiluna and South Boddington close to Newmont’s giant mine. Impatient investors are waiting for more drilling updates, which are in the planning phases to offer significant newsflow potential for the rest of this year.
Buru Energy (ASX: BRU; last trade 14.5¢): A measure of the potential of Buru’s onshore Canning Basin conventional oil exploration prospects is that Origin Energy (ASX: ORG), one of the ASX’s largest stocks, has farmed in and is funding a big lick of the cost of the upcoming drilling campaign. The first well, Currajong-1, is just days from spudding. In the meantime, Buru is preparing for the latest oil lift (and therefore revenue generator) from its Ungani operation.
Core Lithium (ASX: CXO; last trade 23.5¢): One of the quiet achievers, Core is living up to its tagline as Australia’s next spodumene concentrate producer. The start of construction of the shovel-ready Finniss project, on the outskirts of Darwin, should be just months away in line with Core’s target to be in production by the end of next year. And what a time to enter production.
DDH1 (ASX: DDH; last trade $1.16): Australia’s premier drilling services provider is struggling – to find enough rigs to satisfy minerals drilling demand across Australia. Having listed on the ASX in March, the company is preparing for its maiden full-year results and dividend announcements, scheduled for late August, and should be regarded as a great barometer of the flurry of activity in exploration and mine drilling across the country.
FBR (ASX: FBR; last trade 3.8¢): Western Australia has always batted above the national average when it comes to ground-breaking innovation. FBR’s Hadrian X brick-laying robot is one such example and has been quietly putting together an impressive portfolio of safe and efficient property builds. Innovation can be a slow burn, as the smart investor understands, but worth the journey.
Finbar Group (ASX: FRI; last trade 85.5¢): Few ASX stocks can be regarded as a better barometer of the West Australian economy than the State’s leading apartment development company. Finbar’s growth pipeline is strong, in a strong WA economy, and the company has reported growing pre-sales.
Focus Minerals (ASX: FML; last trade 26¢): Shandong Gold spent about $600 million acquiring Cardinal Resources, one of Investor Insight’s former portfolio companies. Oft ignored is that Shandong owns almost 50% of Focus, which has some of gold’s most prospective landholdings in the Coolgardie and Laverton areas. Drilling and resource remodelling continue to deliver golden results and pave the way for a positive development pathway.
Gold Road Resources (ASX: GOR; last trade $1.42): Few ASX-listed gold producers can claim to have paid a maiden dividend within two years of a first gold pour. But then Gold Road has been breaking records ever since its 2013 discovery of the world-class Gruyere gold deposit in Western Australia’s northern Goldfields. Gruyere is ramping up to average annual production of 350,000 ounces a year.
Hastings Technology Metals (ASX: HAS; last trade 17¢): The Perth company is fast moving towards financial close and the start of construction of its world-class Yangibana rare earths project in Western Australia’s Gascoyne region. Industry high levels of neodymium and praseodymium (NdPr for short, and a key component in electric vehicles’ permanent magnets) and the fact Hastings raised $100 million in equity earlier this year – effectively the equity component for Yangibana’s development – are attracting investor interest. And add to the Hastings attraction the offtake deals with German heavyweights thyssenkrupp and Schaeffler.
Mineral Resources (ASX: MIN; last trade $50.73): The powerhouse of the West Australian mining sector has unveiled plans to boost its iron ore production capacity to 90mtpa. Few would bet against MinRes achieving what it sets out to do. And even though all the market’s attention is on record-high iron ore prices, MinRes is also one of the world’s largest lithium producers and looking forward to its part-owned Kemerton lithium hydroxide plant starting up towards the end of this year. And don’t ignore the mining services division – MinRes’ life blood – which is firing on all cyclinders.
Northern Minerals (ASX: NTU; last trade 3.3¢): The Browns Range heavy rare earths operation in Western Australia’s Kimberley is a globally significant source of dysprosium, alongside NdPr another key component in the permanent magnets in the EV revolution. Northern Minerals has been producing dysprosium-laden heavy rare earths concentrate from Browns Range and sent shipments to key partners including thyssenkrupp. Alongside the pilot plant operation, Northern Minerals is busy expanding the resource base at Browns Range.
NRW Holdings (ASX: NWH; last trade $1.51): A slew of well-timed business acquisitions – the latest being Primero – has turned NRW into one of Australia’s leading mining and civil contracting companies. The forecast infrastructure investment spree, not just as part of the national COVID-19 recovery program, and a continued strong resources sector paint a positive future for the Perth-based company.
Rox Resources (ASX: ROX; last trade 3.1¢): Investors are looking for the next near-term gold development story and they need to look no further than Rox, which is fast advancing its Youanmi project in Western Australia’s Yilgarn region. A resource upgrade to 1.7 million ounces at 2.85g/t has pleased investors, who are also poised to benefit from Rox’s intention to spin off the company’s nickel assets – Fisher East and Collurabbie– into new IPO Cannon Resources in coming months.
St George Mining (ASX: SGQ; last trade 7.2¢): Few ASX explorers can claim the high nickel-copper sulphide grades that St George has intersected at its Mt Alexander project in Western Australia’s Goldfields. The latest discovery, near the Investigators deposit, intersected 11m at 1.6% nickel, 0.7% copper and 1.23g/t of PGEs including a 1.3m stretch of 6.5% nickel, almost 3% copper and 3.88g/t PGEs – just as the world is realising the importance of nickel to the battery minerals mix. Never a one-trick pony, St George has also just kicked off a maiden drill campaign at its Paterson Project – in the middle of Australia’s hottest exploration address.
Torrens Mining (ASX: TRN): The explorer only listed in January following a well-subscribed IPO. Although its legacy is a 30% stake in the exciting Elizabeth Creek copper project in South Australia, where it and partner Coda Minerals have made a strong, deep copper sulphide discovery, Torrens’ main game is the Mt Piper gold project in the Central Victorian Goldfields, not far from Kirkland Lake Gold’s stunning Fosterville mine. Torrens has only just kicked off a key drilling program at Mt Piper, which augurs well for newsflow for the remainder of this year.
Tribune Resources (ASX: TBR; last trade $4.90): Tribune and its sibling Rand Mining (ASX: RND; last trade $1.46) are partners in the Northern Star Resources-run East Kundana gold joint venture in Western Australia’s Goldfields. But the Tribune sleeper is the fast-growing Japa gold project in Ghana, which already has a 1.8 million ounce resource grading 2.7g/t at the Adiembra prospect.
VRX Silica (ASX: VRX; last trade 22¢): Silica sands do not attract the attention they warrant, given the global shortage of this key commodity required by the construction but also glass-making industries. VRX’s three projects in Western Australia – Arrowsmith North, Arrowsmith Central and Muchea – contain highest-quality silica sands that can be used in glass making including solar-panel glass. Importantly, the respective mineral resources offer a long-life, low-capital cost opportunity, which VRX will be expected to build on in the second half of this year.
Zenith Minerals (ASX: ZNC; last trade 26.5¢): Last in alphabetical order only, Zenith has blasted its way to the top of the list of top performers courtesy of the Earaheedy zinc-lead discovery north of Wiluna in Western Australia, in conjunction with partner Rumble Resources, and its wholly owned Split Rocks gold project, south of Southern Cross. Strong results from both projects have generated huge amounts of investor excitement, highlighting again that systematic and disciplined exploration can pay handsome dividends.
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