ASX retreats on Monday, ahead of Federal Budget Tuesday night
Oil weakness drags Energy sector lower
Chinese shares slump on new US tariffs
After advancing 1.5% last week, the ASX200 retreated on Monday by -0.3%, dragged down mostly by energy and real-estate related stocks.
Nearing the close of day, this is how the 11 ASX sectors performed:
Source: MarketIndex
On Friday, a late selloff on Wall Street ensued after comments from Fed Reserve Governor Michelle Bowman, who said that interest rates should remain unchanged “for a bit longer,” echoing sentiments shared by other Fed officials in recent weeks.
“I’ve sort of had an even expectation of staying where we are for longer. And that continues to be my base case,” she told Bloomberg News.
Sentiment on Friday was also dragged down by the soft US Michigan Uni consumer sentiment reading.
Oil prices meanwhile extended their selloff in Asian hours today, dragging down oil stocks on the ASX.
Crude prices are already nursing losses from last week, and there’s some nervousness in the air about fuel demand and high inflation hitting the world’s biggest fuel consumer.
The US will release its inflation report for April on Wednesday (US time), with analysts anticipating that it will maintain the trend of elevated figures seen this year.
Back to the ASX, Fletcher Building (ASX:FBU), the construction group, dropped -10% today after lowering its earnings forecast for fiscal 2024. This is due to the significant slowdown in house sales in New Zealand, and Aussie property market not doing too flash.
Lendlease (ASX:LLC) was also among the biggest losers, down -4% after announcing a $112 million tax bill from the Australian Taxation Office, which is related to a tax dispute it’s been having with the ATO over its retirement living business.
Chinese stocks slump on tariffs
Across the region, Asian stocks swung between gains and losses on Monday.
Over in Hong Kong, the Hang Seng benchmark index hit its highest point since August, but mainland-listed shares on the HKSE weren’t faring as well, mostly in the red.
Chinese stocks have been dragged down after President Biden is reportedly planning to increase tariffs on Chinese electric vehicles and other industries, with an announcement expected this week.
Some taxes will be quadrupled, for example, tariffs on Chinese EVs will go up from 27.5% to 102.5%. The tariffs on other industries might also double or triple, but details are scant at this stage.
Other catalysts that could shake up markets this week include China’s rate decision happening on Wednesday, and the US April inflation report, also dropping on the same day.
ASX SMALL CAP LEADERS
Today’s best performing small cap stocks:
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Code Name Price % Change Volume Market Cap BUR Burleyminerals 0.16 86% 1,759,609 $12,931,901 ERW Errawarra Resources 0.10 67% 16,363,507 $5,755,240 FAU First Au Ltd 0.01 67% 84,239,160 $4,985,980 APC Aust Potash Ltd 0.00 50% 6,183,514 $4,000,189 LPD Lepidico Ltd 0.00 50% 5,300,870 $17,178,239 IND Industrialminerals 0.24 37% 551,432 $12,033,000 ANX Anax Metals Ltd 0.06 34% 37,512,693 $26,017,952 PUA Peak Minerals Ltd 0.00 33% 20,471,066 $3,124,130 RDS Redstone Resources 0.00 33% 150,000 $2,776,135 MGU Magnum Mining & Exp 0.02 32% 18,999,968 $11,331,060 BYH Bryah Resources Ltd 0.01 29% 9,665,201 $3,048,175 LV1 Live Verdure Ltd 0.54 29% 720,552 $52,381,684 PNN Power Minerals Ltd 0.14 29% 1,177,827 $9,723,529 EXL Elixinol Wellness 0.01 25% 4,066,519 $5,204,296 ID8 Identitii Limited 0.01 25% 671,703 $3,441,904 NTM Nt Minerals Limited 0.01 25% 100,000 $4,039,612 RML Resolution Minerals 0.00 25% 480,000 $3,220,044 FTL Firetail Resources 0.06 24% 394,731 $7,445,278 OIL Optiscan Imaging 0.12 22% 1,158,622 $81,863,399 FZR Fitzroy River Corp 0.15 21% 40,879 $12,954,510 D3E D3 Energy Limited 0.24 20% 1,245,117 $15,895,001 TON Triton Min Ltd 0.02 20% 2,751,714 $19,517,408 AYT Austin Metals Ltd 0.01 20% 75,000 $6,425,957 CCO The Calmer Co Int 0.01 20% 6,788,340 $6,804,398 EMT Emetals Limited 0.01 20% 710,845 $4,250,000
Leading the ladder on Monday morning was Errawarra Resources (ASX:ERW) jumped after saying that it has identified a “large, stacked pegmatite swarm” at its 100kkm2+ Andover West project, which is about 40km east-southeast of Karratha, WA, and just south of Azure Minerals’ (ASX:AZS) Andover LCT Pegmatite project (now owned by SQM/Hancock). Andover West has, notes the company, a highly promising exploration target of 100-240mt at 1-1.5% Li2O.
Elixinol Wellness (ASX:EXL) gained on news that it’s received $2.3m from divesting its minority stake in Altmed Pets.
Magnum Mining and Exploration (ASX:MGU) rose sharply after telling the market that it and Middle East for Metallic Industrial (Midmetal) have entered into an agreement with the Nasdaq-listed V Capital Consulting and 2×1.Digital to raise more than US$210m to advance a green pig iron project in Saudi Arabia. Additionally, Magnum is set to “receive no less than US$10m as working capital for its flagship Buena Vista magnetite project in Nevada for the issue, subject to Magnum shareholder approval”.
Anax Metals (ASX:ANX) had a good one on news strengthened copper prices have enhanced the company’s Whim Creek project’s economics by 32% providing a Pre-Tax NPV7 of $357M and IRR of 74%, bumping the planned 8-year mine life out to a position that the company says will generate ~$520M in “free cash”.
Explorer Power Minerals (ASX:PNN) announced that it has a new niobium-rare earths project in WA’s West Arunta region, immediately adjacent to WA1 Resources (ASX:WA1) major niobium discovery, Luni. Power says that the Waterlander ground provides it with an “early-mover opportunity in an emerging world-class niobium-REE exploration precinct” and it plans to undertake targeted field work to define initial drill targets.
Lightning Minerals (ASX:L1M) provided an update on the progress of the Dundas South Project, and shared assay findings from its recent drilling campaign on tenement E63/2000. This drilling initiative targeted lithium and rubidium prospects identified through regional soil exploration endeavours.
The results underscore a consistent presence of robust lithium and rubidium deposits, with concentrations reaching as high as 994ppm lithium and 1,834ppm rubidium at depths of up to 26m.
Latrobe Magnesium (ASX:LMG), which is developing a magnesium production plant in Victoria’s Latrobe Valley using its patented extraction process, is also double digits to the good today. LMG notes today that it’s the first company in the world to produce magnesium oxide (MgO) from brown coal fly ash – a waste product from brown coal power generation. Also proudly noted by the company is the fact it’s “the only new magnesium producer in the western world since 2015 with sustainable production emitting 60% less CO2 than the industry average”.
Vanadium Resources (ASX:VR8) gave an update on its Steelpoortdrift Vanadium Project in South Africa. The company has signed a non-binding MOU with Zhongxin for the offtake of V2O5 production from this Project. This MOU outlines the supply of 4ktpa of V2O5 flake over five years, with an option to extend for another five years. Further negotiations will cover price, product quality, and other offtake terms.
This agreement with Zhongxin adds approximately 37% to VR8’s planned annual average V2O5 flake production capacity of around 11ktpa from the initial Phase 1 operation of the Project.
Southern Cross Electrical Engineering (ASX:SXE) announced an upgrade to the profit guidance it gave to the ASX on 6 May. Following today’s announcement of the acquisition of MDE Group, SXE now anticipates FY25 EBITDA will increase from at least $48m to at least $53m.
Given the timing of completion of this acquisition, MDE’s contribution to FY24 is expected to be immaterial and therefore SXE Greaffirms its previous guidance that FY24 profitability will match FY23 EBITDA.
Ramelius Resources (ASX:RMS)’s updated Mineral Resource Estimate, now including adjacent Lone Pine and Theakston deposits and incorporating recent drilling and mining information were: 21Mt at 1.7g/t for 1,200,000 ounces (up 64% on June 2023 MRE).
This combines previous Mineral Resource Estimate of 730,000 oz and Exploration Target of 125,000-225,000 oz into a single resource, with the result well exceeding the upper end of the Exploration Target range, and also containing over 75% in either the Measured or Indicated categories.
Optiscan (ASX:OIL) has signed a 24-month know-how agreement with famed US academic medical centre Mayo Clinic to develop a new endomicroscopic imaging system for use in robotic surgery. This will combine the company’s engineering expertise in digital endomicroscopic hardware and software development with Mayo Clinic’s know-how in robotic surgery and quality patient care. Co-development and clinical testing will begin with an initial focus on robotic-assisted breast cancer surgery.
ASX SMALL CAP LAGGARDS
Today’s worst performing small cap stocks:
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Code Name Price % Change Volume Market Cap JTL Jayex Technology Ltd 0.001 -80% 7,569,497 $1,406,393 AXP AXP Energy Ltd 0.001 -50% 1,119,999 $11,649,361 JAV Javelin Minerals Ltd 0.001 -50% 285,001 $4,352,462 AVW Avira Resources Ltd 0.001 -33% 62,500 $3,995,685 CNJ Conico Ltd 0.001 -33% 220,000 $2,707,643 GCM Green Critical Min 0.003 -25% 232,500 $4,546,340 LSR Lodestar Minerals 0.002 -25% 5,029,000 $4,046,795 TD1 Tali Digital Limited 0.002 -25% 1,085,956 $6,590,311 TX3 Trinex Minerals Ltd 0.003 -25% 350,000 $7,254,609 MEM Memphasys Ltd 0.007 -22% 35,962 $12,309,680 SPX Spenda Limited 0.007 -22% 2,903,228 $38,920,120 BYE Byron Energy Ltd 0.047 -22% 11,938,025 $64,727,129 ICL Iceni Gold 0.070 -21% 8,563,300 $21,943,934 AVC Auctus Invest Grp 0.470 -20% 38,882 $44,563,727 HFY Hubify Ltd 0.012 -20% 500,000 $7,442,044 MKL Mighty Kingdom Ltd 0.004 -20% 5,662,777 $12,487,999 PKO Peako Limited 0.004 -20% 400,000 $2,635,424 ROG Red Sky Energy. 0.004 -20% 2,646,366 $27,111,136 PL3 Patagonia Lithium 0.100 -17% 156,060 $5,895,420 TM1 Terra Metals Limited 0.050 -17% 5,028,604 $17,746,722 1MC Morella Corporation 0.003 -17% 41,722,986 $18,536,398 KGD Kula Gold Limited 0.010 -17% 716,984 $5,837,543 MCT Metalicity Limited 0.003 -17% 19,320,288 $13,455,285 MEL Metgasco Ltd 0.005 -17% 554,173 $6,383,320 NSX NSX Limited 0.020 -17% 117,000 $11,341,706
IN CASE YOU MISSED IT
AdAlta (ASX:1AD) has signed a strategic deal designating Cell Therapies (CTPL) as the preferred manufacturing partner for its cellular immunotherapies, further enhancing its AdCella venture.
Anax Metals (ASX:ANX) has upgraded economics of its Whim Creek copper project by 32% due to strong copper prices. This increases free cash flow from $340m to $520m and will deliver pre-tax NPV and IRR of $357m and 74% respectively.
Bioxyne (ASX:BXN) has inked a commercial supply and collaboration agreement with Cy Biopharma AG of Switzerland to develop psilocybin products targeting treatment of depression and pain in Australia and New Zealand.
D3 Energy’s (ASX:D3E) first two wells at its ER315 permit in South Africa have been completed with concentrations of up to 5.1% helium observed. The wells were drilled to confirm the geological model and determine if both methane and helium gas migration was a function of faulting and associated fractures below the base of the Karoo Formation at the well locations.
Latin Resources (ASX:LRS) has completed an extensive resource drilling campaign of 304 holes totalling >93,000m that was designed to shape and update the current 63.5Mt at 1.3% Li2O resource at the Colina deposit within its Salinas lithium project in Brazil.
Lithium Universe’s (ASX:LU7) ongoing test work has demonstrated that its Bécancour lithium refinery design can produce battery-grade lithium carbonate from various types of spodumene sourced from around the world.
OD6 Metals’ (ASX:OD6) metallurgical test work has achieved up to 90% rare earths recovery for material sourced from its Splinter Rock project near Esperance. This data is being considered as part of the future resource upgrade expected to be available this quarter.
Red Metal (ASX:RDM) is carrying out a 10,000m Phase 2 step-out drilling program at its new Sybella rare earth oxide discovery in northwest Queensland to test further along the granite which hosts the mineralisation.
Riversgold (ASX:RGL) has raised $1.85m through a share placement to accelerate drilling designed to define maiden resources at its Northern Zone gold project near Kalgoorlie.
Terra Metals’ (ASX:TM1) first three holes at its Dante project in WA’s West Musgrave region have intercepted magmatic sulphide mineralisation in stratiform ‘reefs’ which outcrop for more than 23km.
Australian Mines (ASX:AUZ) has submitted patents for the use of its MH-Oct22 and MH-May24 metal hydrides to store hydrogen in a solid state, which could address the energy density issues as well as challenges involved with either compressing or liquefying the gas. The company’s research program is aimed at reducing the metal hydride’s operating temperature and increase the absorption and desorption rates while maximising energy density. While MH-Oct22 has proven to be capable of storing significant quantities of hydrogen, MH-May24 demonstrates significant improvement in the absorption and desorption rates of hydrogen at lower temperatures and may have higher energy density than compressed or liquefied hydrogen.
BPH Energy (ASX:BPH) has raised $1m through a placement of shares priced at 2c each to execute its next phase of hydrocarbon and Cortical Dynamics funding. Placement participants will also receive one attaching option exercisable at 3c and expiring on 30 September 2024 for every two shares that they subscribe for. Most of the funds will go towards gas exploration to help address the coming eastern Australia gas supply crunch.
TRADING HALTS
Oceana Lithium (ASX:OCN) – pending an update of exploration results at the Company’s Napperby Project.
Australian Gold and Copper (ASX:AGC) – pending the release of an announcement to the market regarding exploration results.
IperionX (ASX:IPX) – pending an announcement regarding a proposed capital raising.
Cosmos Exploration (ASX:C1X) – pending the release of an announcement regarding an acquisition and a capital raising.
Firebird Metals (ASX:FRB) – pending an announcement in relation to project financing initiatives.
Killi Resources (ASX:KLI) ) – pending an announcement in relation to a potential joint venture and capital raising.
Perpetual Resources (ASX:PEC) – pending an announcement regarding a proposed material acquisition.
Parkway Corporate (ASX:PWN) – pending the release of an announcement to the market relating to a potential capital raise.
Control Bionics (ASX:CBL) – pending an announcement in relation to a capital raising.
At Stockhead, we tell it like it is. While Anax Metals, Bioxyne, D3 Energy, Latin Resources, Lithium Universe, OD6 Metals, Red Metal, Riversgold, Terra MetalsAustralian Mines, BPH Energy and Optiscan Imaging are Stockhead advertisers, they did not sponsor this article.
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