PERTH (miningweekly.com) – The Western Australian resources sector was optimistic that the change in government would deliver more benefits, advisory firm Deloitte said on Friday.
“Business and investor confidence has improved during the month, largely due to the expectation that the new federal government will reduce the regulatory burden faced by companies in their day-to-day operations,” said Deloitte lead audit partner Tim Richards.
He noted that the Deloitte quarterly CFO survey had consistently showed policy-related uncertainty was a major concern for business decision-makers, but noted that post-election optimism and positive Chinese economic data had continued to push equity markets higher.
The market capitalisation of Western Australia-listed companies, which comprise the Deloitte WA Index, rose for the third consecutive month in September, by 2% to A$145.7-billion.
While the ASX All Ordinaries also posted growth during the month, rising 1.8%, Western Australia led the country in terms of post-election optimism, based on the bimonthly Allianz Future Optimism Index.
At the same time, a shift in key economic fundamentals, including a lower Australian dollar and interest rates remaining at record lows, eased some of the pressure faced by exporters, as well as manufacturing, tourism, international education and retailing, said Richards.
However, he cautioned that the Western Australian economy still had challenges to overcome, as resource companies continued their efforts to reduce costs, rein in spending on large projects, and transition from a construction boom to a production boom.
Commodity prices surveyed were mixed during the month of September, Richards said, noting that tin prices rose 9.8%, as a result of a policy change in Indonesia, the world’s second-largest producer and largest exporter of the metal.
The requirement for Indonesian producers to trade the metal locally prior to exporting tin shipments had driven the value of tin upwards, which was the intended outcome of the policy.
Meanwhile, Brent crude oil prices fell 7.2% largely as a result of the likelihood of Allied military intervention in Syria receding, combined with the resumption of Libyan oil exports. Further, the possibility of a US government shut down of inessential services towards the end of September, which subsequently came to pass on October 1, and a rise in US crude oil stockpiles, also pushed oil prices downwards, reaching a 12-week low at the end of September.
The Movers and Shakers for the month of September include Atrum Coal and Perilya, with increases in market capitalisation of 59.3% and 45.5% respectively.
Atrum, an emerging metallurgical coal explorer and developer, posted an increase in market capitalisation of A$97-million, to close the month at A$262-million, a rise of 59.3%.
The release of the results of a scoping study on the company’s primary project in British Columbia, the Groundhog project, in late August bolstered Atrum’s share price.
The company announced the project’s before-tax free cash flows would average A$119-million a year over the first five years, increasing to A$326-million a year if the ultimate saleable production target of three-million tonnes a year is reached.
Base metals mining and exploration company Perilya increased its market capitalisation by A$77-million over the month, from A$169-million to A$246-million.
This increase was attributable to a binding scheme implementation agreement, which Perilya entered into with its largest shareholder Zhongjin Lingnan Mining Company Limited (Zhongjin), which proposed Zhongjin acquire all outstanding shares in Perilya for A$0.35 per share.
The scheme meeting is expected to be held by early December.