JOHANNESBURG (miningweekly.com) – The Deloitte Western Australia Index fell by 2.8% during May, with the market capitalisation of Western Australia-listed companies closing the month at A$132.4-billion.

Deloitte clients and markets partner for Western Australia, Tim Richards, said on Wednesday that while the decline was largely attributed to a poor month for the state’s biggest listed company, Wesfarmers, there was strong market interest in lithium.

“Wesfarmers announced write-downs and restructuring costs of approximately A$2-billion in May in relation to its Target department stores and a Queensland coal mine, which coupled with poorly performing commodities affecting some of Western Australia’s major listed resources players, dampened what would have otherwise been a positive month for the index.

“However, lithium was centre stage as a market favourite with continued interest in the light metal,” Richards said.

Among the major index players, Pilbara Minerals’ market capitalisation grew by A$151-million, or 25.4%, as a result of a number of events including continued positive exploration results at the company’s flagship Pilgangoora project, increased investor interest in lithium, and the completion of equity raisings during the month.

Galaxy Resources’ market capitalisation increased by A$99-million, or 20.2%, during May, with the increase driven by strong market interest in lithium, and also the proposed merger with joint venture partner General Mining, which combined, would make the group one of the largest local lithium exploration and production companies.    

Northern Star Resources’ market capitalisation rose by A$264-million, or 11.4%, during the month as the company continued on a stable path of growth, aided by a depreciating Australian dollar and strong operational performance. For the 2016 financial year, Northern Star budgeted to spend $74-million on exploration and expansionary capital expenditure in order to expand production organically, with $18-million spent in the March 2016 quarter.

The top Deloitte WA Index ‘movers and shakers’ in May included Atlas Iron, which posted a 119.6% increase in market capitalisation from A$61-million to A$135-million. The positive performance was mainly attributable to recent debt restructuring, giving lenders a cumulative stake of about 70% in the company and an extended maturity date to 2021. The investor presentation released in May also resonated with investors, as Atlas Iron continued to cut costs and expand into the growing lithium market.  

Base Resources posted an 81% increase in market capitalisation to A$83-million, on the back of positive announcements by its peers in relation to improving general market conditions for mineral sands.

Lithium Australia posted a 73.1% increase in market capitalisation to A$95-million. On May 26, the company announced it had earned the first 25% in the Electra project located along the Sonora lithium clay deposit in Mexico. This new and significant interest opened up exploration in a world-class area and allowed the opportunity to advance a commercial processing technology applicable to lithium clay deposits.