Tis the season for gazing in the crystal ball. We asked five noted fundies and analysts which metals and stocks they\u2019re bullish on going into the New Year.<\/p>\n
\u00a0<\/p>\n
We\u2019ve put the call out to some of Australia\u2019s foremost resources experts to get their take on the market in 2024.<\/p>\n
2023 was a year in which bull commodities like lithium, rare earths and nickel fell in a heap, and seemingly dead-in-the-water metals like uranium, iron ore and coking coal boomed. What\u2019s next?<\/p>\n
We\u2019ve put the call out to some of Australia\u2019s foremost resources experts to get their take on the market in 2024, and the\u00a0small cap mining stocks they are keeping a close eye on going into the Year of the Dragon.<\/p>\n
\u00a0<\/p>\n
As you may recall, our Ten Bagger expert John Forwood and his Lowell Resources Fund (ASX:LRT)<\/a> spanked the ASX 200 this year largely thanks to a spectacularly well-timed bet on lithium boom stock Azure Minerals (ASX:AZS)<\/a>.<\/p>\n After getting $1 million in at 27.2c, Lowell sold out the bulk of its position 3.3 million out of 4 million shares at an average price of $3.58 \u2014 equivalent to almost $12 million.<\/p>\n Its final holding looks set to net another healthy profit \u2014 with Gina Rinehart\u2019s Hancock Prospecting and Chile\u2019s SQM odds on to complete a joint takeover next year at $3.70 or $3.65 a share. Like in sports though you\u2019re only as good as your last pick. So what does the respected fundie, geologist and lawyer like for 2024?<\/p>\n \u00a0<\/p>\n \u201cPlatinum \u2013 structurally 35% of PGM mines (dominated by South Africa) are loss making at the moment and shafts are closing on the Eastern Bushveld,\u201d Forwood says.<\/p>\n \u201cBut the World Platinum Investment Council forecast a deficit of 353,000oz for 2024, after a 2023 deficit of 1Moz. The WPIC says automotive demand continues to strengthen, up 14% this year, with a further 2% increase expected next year.<\/p>\n \u201c2023 will see the highest industrial demand on record, with 2024 forecast to be the third-highest.\u201d<\/p>\n \u00a0<\/p>\n \u201cCobalt<\/strong>. It is mainly produced as a by-product at copper and nickel mines in the Democratic Republic of Congo and Indonesia, meaning production continues even when cobalt prices fall (but copper prices for example remain steady, as has happened),\u201dForwood says.<\/p>\n \u201cChina\u2019s CMOC was banned from exporting copper and cobalt from the Tenke-Fungurume mine in the DRC for 10 months until April this year.<\/p>\n \u201cThat created a big stockpile of cobalt which is slowly being pushed into the market, while its KFM mine began producing this year.<\/p>\n \u201c\u2018Cobalt is one of the worst markets I\u2019ve ever seen. I can\u2019t remember a similar level of oversupply,\u2019 according to Jim Lennon, nickel market guru at Macquarie. \u2018For the next three or four years, the projected supply increase is almost double the market size.’\u201d<\/p>\n \u00a0<\/p>\n Cooper Metals (ASX:CPM)<\/a>: \u201cIt has a market cap $20m with an exciting looking discovery at its Mt Isa East project in Queensland,\u201d Forwood says.<\/p>\n \u201cCooper reported a standout first pass RC drill result of 71m at 2.8% Cu, with follow-up drilling once the wet season is over in March next year.\u201d<\/p>\n Rugby Resources (TSX-V:RUG)<\/strong>: \u201cRugby has a market cap of C$14m with a big porphyry copper discovered in Colombia, adjacent to a rumoured Rio Tinto discovery,\u201d Forwood says.<\/p>\n \u201cWe are looking for an announcement of a favourable JV with a major in H1 2024.\u201d<\/p>\n CAA Mining (Unlisted)<\/strong>: \u201cLRT is a substantial holder of CAA Mining, an unlisted lithium explorer with an \u00a38m market cap,\u201d Forwood says.<\/p>\n \u201cCAA has 5 licences just granted adjacent to Atlantic Lithium\u2019s (ASX:A11)<\/a> Ewoyaa project in Ghana (35Mt at 1.25% Li2O).<\/p>\n \u201cCAA is carrying out the first ever RC drilling on nine targets (never before drilled) and has intersected pegmatite over 100m thickness. Assay results are expected early 2024.\u201d<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n A geologist for over 20 years, Hedley Widdup is renowned for his mining investment clock, with his calls on when the mining cycle has hit its peak known for their perspicacity.<\/p>\n After selling out of a gold project in Indonesia, Lion (ASX:LSX)<\/a> is investing in early stage exploration plays in Australia and keeping its powder dry.<\/p>\n It has $70m in cash ready to deploy, Widdup told Stockhead<\/em> in pre-development mining plays after the market has hit the floor in preparation for the next upswing.<\/p>\n LSX has also recently made a big investment in an unlisted explorer called Plutonic, which is exploring in virtually uncharted territory in the NT.<\/p>\n \u00a0<\/p>\n \u201cThe best investing theme will be bargains,\u201d Widdup says.<\/p>\n \u201cWe\u2019ve had a flurry of equity market hopefulness in the last few weeks revolving around peaking inflation and interest rates, which already looks to be wearing off.<\/p>\n \u201cI am sure there will be resurgences to this through 2024 and doubt that it\u2019s the macro picture that many people or investors are hoping for.<\/p>\n \u201cIf it\u2019s good for a commodity it would be gold, but that might mean it is reasonably robust where others weaken. Sorry not to be more optimistic.<\/p>\n \u201cGold equities, especially micro-capitalisation sized companies, have been one of the most contrarian themes in the market in 2023. If there are periods when gold rallies in 2024 to test levels like US$2100 and US$2200\/oz, I think investors will be tempted to have a closer look at explorer\/developer companies with gold.<\/p>\n \u201cIn the listed space, with the strong likelihood of ongoing market weakness and depressed share prices, I think there is a strong possibility of consolidation within the mining juniors.<\/p>\n \u201cThat is especially in sectors like gold where there is a fair population of companies with established projects and mineral inventories.\u201d<\/p>\n \u00a0<\/p>\n \u201cI think the areas of the mining equity market that are at most risk are those that have been headlines in 2023,\u201d Widdup says.<\/p>\n \u201cTwo key themes come to mind. Firstly uranium<\/strong> \u2013 I am not a doubter that nuclear power has potential as a sustainable form of non-CO2 emitting energy, I just see a lot of challenges to overcome to broad proliferation of nuclear power.<\/p>\n \u201cThe price of uranium has rallied, but so much of this material is sold under long term contract to utilities that really don\u2019t want to lock in 10 years of price based on a spot price spike, I don\u2019t know that the commodity price performance we have seen is conducive to generating substantial growth in long term demand for uranium.<\/p>\n \u201cThe second theme is the market excitement around WA based lithium explorer<\/strong>s \u2013 where there have been billionaires buying in at above takeover bid prices.<\/p>\n \u201cThis interest is against the grain of the lithium price and the equities of lithium producers and as much as the market seems happy to speculate that this amazing buying interest will lead somewhere (it has certainly enabled enhanced liquidity for these particular stocks), I suspect they get caught up in the overall lithium trend during 2024.\u201d<\/p>\n \u00a0<\/p>\n Saturn Metals (ASX:STN)<\/a>: Saturn has a huge gold resource. It\u2019s low grade so it\u2019s overlooked but has metallurgy that favours heap leaching. So there is a pathway to the sort of asset that the Americans are familiar with but Aussies aren\u2019t.<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n Warwick Grigor remains the prime mover at Far East Capital having established the firm with now WA iron ore billionaire Andrew Forrest in the 1990s.<\/p>\n The veteran stockbroker also has board seats at a host of ASX stocks including Aguia Resources (ASX:AGR)<\/a>, West Wits Mining (ASX:WWI)<\/a> and First Graphene (ASX:FGR)<\/a>.<\/p>\n \u00a0<\/p>\n \u201cI like gold,\u201d Grigor says.<\/p>\n \u201cFalling interest rates and geopolitical uncertainty, and there is continuing dissipation of electric vehicle inputs being a path to share market profits.<\/p>\n \u201cUranium has already got a fair bit of optimism built into it. I think that\u2019ll get more political support from around the world, with the only caveat being that there\u2019s a risk of a black swan with Putin doing something stupid with nuclear power plants in Ukraine.<\/p>\n \u201cWith interest rates expected to fall during the course of next year, thereby avoiding recessions and economic activity will pick up a bit, that\u2019ll send us back to more traditional metal stocks.<\/p>\n \u201cThey\u2019ll do better next year than they did the year we\u2019re just closing but to say how something\u2019s going to go for a full year, it\u2019s pretty hard to see more than three months in advance in this market.\u201d<\/p>\n \u00a0<\/p>\n \u201cLithium<\/strong> is likely to be the worst performer. There will be an exhaustion of punters and realisation that there is no shortage,\u201d Grigor says.<\/p>\n \u201cWe\u2019ve had all this money going into green things and EV input materials in the last couple of years and it\u2019s all starting to come unstuck now.<\/p>\n \u201cWe\u2019ve had rare earth prices collapse, lithium prices collapse. They\u2019ve fallen so hard it\u2019s natural to have a bounce, but they\u2019re not going to come back with the same sort of enthusiasm as we had before.\u201d<\/p>\n \u00a0<\/p>\n NexGen Energy (ASX:NXG)<\/a>: \u201cNexGen is a high grade uranium discovery in Canada. That\u2019s where the quality is, it\u2019s already performed strongly but I think it\u2019ll continue to do well,\u201d Grigor says.<\/p>\n Aurora Energy (ASX:1AE)<\/a>: \u201cThat looks too cheap in the market,\u201d he says.<\/p>\n \u201cAurora is progressing a scoping study on the Aurora uranium project, a deposit near Thacker Pass in the United States which also has lithium potential.<\/p>\n \u201cThey\u2019re in Oregon and what they\u2019re planning to do is mine it on one side of the border and transport it to Nevada where they can process it.\u201d<\/p>\n Anteotech (ASX:ADO)<\/a>: \u201cAnteotech is putting silicon anode batteries that\u2019s made great technical success that will outperform pure graphite anodes,\u201d Grigor says.<\/p>\n Celsius Resources (ASX:CLA)<\/a>: \u201cCelsius are very cheap in the market. They\u2019re down half because there was a corporate deal that fell over so it fell back to where it came from,\u201d Grigor says.<\/p>\n \u201cIt\u2019s a potentially very profitable, very large copper project in the Philippines. The numbers look very good, but the Canadian company (Silvercorp Metals) tried to get control and the deal fell over.\u201d<\/p>\n Aurelia Metals (ASX:AMI)<\/a>: \u201cThey\u2019ve developing the new Federation ore body. That\u2019s a serious production company that\u2019s turned the corner. That was sold down heavily during the year, but it\u2019s on the mend now,\u201d Grigor says.<\/p>\n Lucapa Diamond Company (ASX:LOM)<\/a>: \u201cI think that\u2019s got tremendous upside both from earnings from the diamond mines and exploration potential,\u201d Grigor says.<\/p>\n \u201cLucapa\u2019s capped at $50m but the money owed to Lucapa by it\u2019s joint venture partners exceeds its market capitalisation.<\/p>\n \u201cThey\u2019re getting a loan repayment of $15m over the next six months, which is about 30% of the market cap. And after they announced that there that they sold four very bid diamonds and their attributable share of that is $10m.<\/p>\n \u201cSo it\u2019s a company which is almost totally derisked, the financials look amazingly good but the market hasn\u2019t woken up to it yet.\u201d<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n Sydney-based mining analyst Gavin Wendt has followed the resources sector for decades. Among his recent successes have been Liontown Resources (ASX:LTR)<\/a> and Capricorn Metals (ASX:CMM)<\/a>, whose share price gains have rallied 5700% and 996% respectively since his bulletin MineLife<\/a> initiated coverage.<\/p>\n \u00a0<\/p>\n \u201c2024 begins with much anticipation from a commodity demand perspective,\u201d Wendt says.<\/p>\n \u201cMany commodities struggled during 2023 due to the combination of China economic woes and high global interest rates, which together managed to strangle demand.<\/p>\n \u201cHowever, China is taking tentative steps along the path to recovery, and global interest rates have almost certainly peaked, providing a supportive environment for most commodities.<\/p>\n \u201cGiven these two key themes, the commodity most likely to benefit from an easing interest rate environment is gold, whilst the commodity that\u2019s set to benefit most from the China recovery story is copper.\u201d<\/p>\n \u201cNickel<\/strong> could underperform the broader commodity sector during 2024, as market fundamentals in terms of demand and supply are the least supportive of the major commodities, with China and Indonesia\u2019s growing relationship being a major contributor,\u201d Wendt says.<\/p>\n \u201cWe have seen China finance a host of value-adding infrastructure within Indonesia, which is providing it with the low-cost nickel supply that it requires.<\/p>\n \u201cNickel has also suffered from a dramatic fall in investor confidence, not helped by short squeezes on the LME trading platform in recent years. Hence, heavyweight investors might look elsewhere in the commodity sphere.\u201d<\/p>\n \u00a0<\/p>\n Barton Gold (ASX:BGD)<\/a>: \u201cOur outlook for gold is robust, as we expect prices to reach new records (likely above US$2100 per ounce) \u2013 based on a weaker US currency, strong central bank buying, a recovery in gold ETF purchases, and escalating debt levels worldwide,\u201d Wendt says. \u201cBarton Gold, which owns the 1.38Moz Tunkillia project, is an emerging production play in South Australia.\u201d<\/p>\n Spartan Resources (ASX:SPR)<\/a>: \u201cSpartan owns the Dalgaranga project where it\u2019s made the large, high grade Never Never discovery,\u201d Wendt says. \u201cIt is currently a highly successful Western Australia exploration company that is looking to make the jump back into production in the near future.\u201d<\/p>\n Astral Resources (ASX:AAR)<\/a>: \u201cAn attractive Western Australian Goldfields corporate play based on its sizeable Mandilla gold resource near Kalgoorlie.\u201d<\/p>\n Revolver Resources (ASX:RRR)<\/a>: \u201cOur outlook for copper in 2024 is also positive, with prices likely to recover as both end-user and investor demand returns, and supplies begin to drop,\u201d Wendt says. \u201cRevolver is an advanced exploration play that is importantly looking to transition to production at its Osprey Project near Mt Isa.\u201d<\/p>\n Anax Metals (ASX:ANX)<\/a>: \u201cAn emerging producer with a focus on its Whim Creek project in Western Australia,\u201d Wendt says. \u201cAfter putting a $71m capex estimate in a DFS this year on restarting the copper and zinc project, Anax received mining approval from the WA government and is progressing funding discussions.\u201d<\/p>\n Orion Minerals (ASX:ORN)<\/a>: \u201cHas two advanced and sizeable copper projects in South Africa\u2019s Northern Cape where it is targeting a return to production.\u201d<\/p>\n \u00a0<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n Cottesloe-based fund manager Nero has had some wins this year, picking Lithium Power International (ASX:LPI)<\/a> ahead of its expected takeover by Chile\u2019s Codelco and leading a campaign to replace the management of ASX energy junior Carnarvon Energy (ASX:CVN)<\/a>.<\/p>\n That saw Nero\u2019s Delroy take a board spot along Collins St Asset Management\u2019s William Barker as non-executive director Debra Bakker and MD Adrian Cook stepped aside at the Dorado oil project participant.<\/p>\n \u00a0<\/p>\n \u201cWe expect to see more government assistance in the US and Europe focused around strategic metals (mostly EV related at this stage) as Chinese EVs are substantially out-competing European\/US domestic producers,\u201d Delroy says.<\/p>\n \u201cAt some stage this should translate to share price support for those companies with resource development assets in these jurisdictions \u2013 hopefully that\u2019s next year. There is genuine asset scarcity so advanced assets will be at a premium at some point.\u201d<\/p>\n \u00a0<\/p>\n \u201cUranium equities<\/strong> generally trade at implied uranium prices way beyond spot and the cost curve,\u201d Delroy says.<\/p>\n \u201cWe are constructive uranium longer term but the equities have probably got ahead of things at this stage. Also iron ore<\/strong> trades way beyond the cost curve and is one of the few commodities with forecast investment growth next year so at some point the supply response will likely pull pricing back from current levels near US$140\/t.\u201d<\/p>\n \u00a0<\/p>\n BP (LON:BP)<\/strong>: \u201cWe very much like the European big cap oil names,\u201d Delroy says. \u201cThey trade at substantial discounts to US peers, have excellent balance sheets and diversified businesses (often including renewables businesses).<\/p>\n \u201cFree cashflows support a combination of dividends and buybacks and we are also constructive in general on oil pricing. BP is probably the standout name.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n At Stockhead we tell it like it is. While Spartan Resources was a Stockhead advertiser at the time of writing, it did not sponsor this article.<\/em><\/p>\n <\/span><\/p>\n The post Undies for Xmas again? Stuff our experts\u2019 small cap picks in your stocking instead<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Best Commodity or Investing Theme?<\/strong><\/h2>\n
Worst Commodity or Investing Theme?<\/strong><\/h2>\n
Stocks for 2024?<\/strong><\/h2>\n
Cooper Metals (ASX:CPM) share price today<\/h2>\n\n
HEDLEY WIDDUP \u2013 LION SELECTION GROUP<\/h2>\n
Best Commodity or Investing Theme?<\/strong><\/h2>\n
Worst Commodity or Investing Theme?<\/strong><\/h2>\n
Stocks for 2024?<\/strong><\/h2>\n
Saturn Metals (ASX:STN) share price today<\/h2>\n\n
WARWICK GRIGOR \u2013 FAR EAST CAPITAL EXECUTIVE CHAIRMAN<\/h2>\n
Best Commodity or Investing Theme?<\/strong><\/h2>\n
Worst Commodity or Investing Theme?<\/strong><\/h2>\n
Stocks for 2024?<\/strong><\/h2>\n
Warwick Grigor\u2019s 2024 stock picks<\/h2>\n\n
GAVIN WENDT \u2014 MINELIFE FOUNDING DIRECTOR AND SENIOR RESOURCE ANALYST<\/h2>\n
Best Commodity or Investing Theme?<\/strong><\/h2>\n
<\/h2>\n
Worst Commodity or Investing Theme?<\/strong><\/h2>\n
Stocks for 2024?<\/strong><\/h2>\n
Gavin Wendt\u2019s 2024 stock picks<\/h2>\n\n
RUSTY DELROY \u2014 NERO RESOURCE FUND FOUNDER AND INVESTMENT MANAGER<\/h2>\n
Best Commodity or Investing Theme?<\/strong><\/h2>\n
Worst Commodity or Investing Theme?<\/strong><\/h2>\n
Stocks for 2024?<\/strong><\/h2>\n