JOHANNESBURG (miningweekly.com) – The Deloitte WA Index climbed marginally higher in the first month of 2018, as the market capitalisation of Western Australia-listed companies increased by 0.48% to close out January at A$181.83-billion.
This marks the fourth month of continuous growth, Deloitte clients and markets partner for Western Australia, Tim Richards said on Friday.
“It is a busy month for investors sifting through quarterly reports and results announcements. In the midst of the ASX slipping slightly, this month has seen some of the resources-focused heavy-hitters on the index announce strong production results. Investors have reacted favourably to these companies meeting, or in some cases exceeding, consensus expectations.”
In a media statement, Deloitte highlighted the index’s major players for January. It said that South32 had a successful month, with its market capitalisation increasing by 9.5% to A$19.79-billion, off the back of strong demand and production for the half-year. The production forecast for manganese operations in South Africa has been lifted by 8% for the remainder of the year, having already been up 16% for the first half. Meanwhile, guidance has been maintained for all other commodities, with these having met expectations for the period.
Independence Group has ridden the wave of growing demand for electric vehicles with market capitalisation increasing by 5.7% for the month nudging it to A$2.95-billion. Investors reacted positively to the group meeting guidance for the half-year ended December 31, amidst increases in the price of nickel and cobalt over the same period of 4.8% and 6.2%, respectively. Optimism surrounds the group given it is well placed to capitalise on the shift in demand towards lithium-powered batteries, as a provider of key components nickel and cobalt.
Sandfire Resources grew by 4.1% during the month as prospective drilling activities announced in early January at the Monty mine were compounded by robust quarterly results. The copper miner is on track to meet full-year guidance of 60 000 t to 63 000 t, and investors were encouraged by second-quarter production growth.
The top Deloitte WA Index “movers and shakers" in January included Base Resources, Australis Oil and Gas and Peel Mining. The market capitalisation of Base shot up 56.5% to A$315.7-million, during a month that saw the African mineral sands producer complete a A$100-million capital raising in order to contribute to the purchase of the Toliara sands project. Record revenue a tonne in the second quarter of $323/t was also announced, as supply shortages have resulted in significant increases in the sales price of zircon.
Progress to reserve and resource positions have seen Australis’ share price increase by 59.6% during January. An independent assessment of existing wells has yielded promising results, which has been well received by investors. This assessment has suggested known resources, subject to prevailing oil prices, will transfer to reserves, within a timeframe of five years to development.
Peel also experienced a fruitful month, its market capitalisation climbing 49.1% to A$145.2-million. Substantial shareholder Hampton Hill Mining has shown confidence by extending its interest in the company through Peel’s recent placement. Assay results revealed mineralisation of zinc, lead, silver and gold at its Southern Nights project to be extensive and high-grade in nature.
During January, nickel prices rose by 4.8% to $13 317/t owing to tight supplies and strong demand in China, alongside positive outlook in its lithium battery usage. The price of cobalt increased by 6.2% to $79 868/t at January 31, as a result of supply concerns stemming from legislative changes in the Democratic Republic of Congo, a major producer of cobalt, and its high demand from battery markets.
Coking coal decreased slightly by 1.6% during the month to finish at $190/t as high domestic prices in China made buyers uneasy and thermal coal increased by 5.4% to A$107/t, owing to tight supplies and heightened demand from Asian markets as manufacturing activity strengthened.
The iron-ore price fell marginally by 0.5%, to $74/t as a result of reduced demand from steel mills and the construction sector in China, attributed to colder conditions and the upcoming Chinese New Year holiday.