Australian market ripe for more gold marriages

by Ross Louthean The mining research head for a major international stockbroker believes 2020 will see more mergers and acquisitions involving Australian junior companies and sees the current uninspiring price of copper, zinc and lithium to begin a climb out of the basement. Reg Spencer of Canaccord Genuity told the RIU Explorers Conference in the Western Australian port city of Fremantle that while the trade peace pact forged between China and the United States was a positive, there was the more recent news of China catching the flu. There was a record attendance at this annual conference of 1500 for an event only outstripped in the Australian mining conference market by Diggers & Dealers Forum in Kalgoorlie. A total of 63 companies, mostly junior explorers, as well as investor analysts and research sector speakers, presented at the three-day event, which concludes today (Thursday). Mr Spencer said 2019 had been a useful springboard, with most metal prices up by 20 per cent led by gold as well as iron ore and nickel. Moving into 2020, the copper price was still below expectations, as was zinc while lithium – a frontrunner in early 2019 – had fallen into the basement because of over-supply to the growing electric vehicle. Mr Spencer said the rapid take-up and the push by many countries to phase out conventional combustion cars should see a steady improvement in the price of lithium which has seen some projects cut back output, and others halt expansion. Coronavirus impact still to be gauged He said while the coronavirus had yet to hit the global epidemic proportions of the common cold, its impact, particularly in Australia’s key trading partner of China, was still to be fathomed. It had to be understood that in the tough Sars virus phase around 2003 China’s global trade GDP was about 5 per cent but today it was about 15 per cent. For many listening to Mr Spencer’s keynote speech, the heartening point was that the gold price on that day had lifted dramatically to above $A2600 an ounce. Looking ahead central banks were again buying more gold, and other positives for the precious metal included where there were now cases of deflation instead of inflation, and low interest rates. The nickel price should be positive going forward with the demand for nickel sulphate in the electric vehicle (EV) market, and the EV market should provide a lift for rare earths as well as lithium where demand in the next few years could rise by 120 per cent. With the gold price at a six-year high the one puzzlement for Mr Spencer was why only one of the leading ASX gold producers was currently building a mine. Perhaps the M&A market with juniors could change that.

Australian market ripe for more gold marriages

Industry Queensland

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