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22nd April 2016
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Ten Bagger
Fund manager Lion Selection says the time has come, Mr Wolf, to buy resources shares   

The political adage that “when the swing is on, it’s on” applies equally to the share market, as the report released this week by resources investment specialist Lion Selection Group shows.

Lion’s highly-regarded fund manager Hedley Widdup, who will be a keynote speaker at next month’s Resources Rising Stars investor conference on the Gold Coast (May 24-25), says the first phase of the resources sector’s comeback is underway.

Widdup says there is a growing band of evidence which supports his conclusion that after five long years of share price weakness, investors are returning to mining stocks.

In light of this, he believes that the famous Lion investment clock has moved to five o’clock, meaning it is time to buy ahead of the next boom, which begins around six o’clock.

Widdup notes that investor sentiment towards miners has switched from “risky and irresponsible” to “rational and cheap”.

As a result, the ASX-200 Resources Index, which fell 16 per cent from January 1 to January 20, subsequently rose 30 per cent to March 7, though it has since slipped around 7 per cent.  Read more
 

Minefield
By Tim Treadgold

Miners cash-in while the cash window is open

Gold stocks, if not the gold price, ran out of puff this week, but the rest of the resources market continued to march higher.

Weighing on Australian gold miners was another impressive rise in the value of the local dollar, which has gained more than US1.5c over the past week, negating the benefits of a US$20 per ounce rise in the gold price.

The currency effect means that the ASX gold index has underperformed the wider market by simply standing still whereas the metals and mining index added an impressive 8.4%, easily outstripping the all ordinaries, which added 2.6%. 


Resource stocks were generally in demand at the top and bottom of the sector with BHP Billiton and Rio Tinto continuing their powerful rally while at the smaller end of the market, the queue of stocks hitting 12-month share-price highs continued to grow. Read more
 
London broker highlights immense upside for Lucapa
 
The London investment community has long been seen as a better judge of horseflesh than its Australian counterpart when it comes to both Africa and diamonds.

So the significance of the decision by respected City of London broker Panmure Gordon & Co to initiate coverage of Angolan gem explorer Lucapa Diamond Company (ASX: LOM) will not be lost on experienced resource investors.

Titled “Breaking the Mould”, Panmure’s extensive and upbeat report places a buy recommendation on Lucapa shares, saying the stock “offers investors something unique”.  Read more
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- Woodside Petroleum become one of the few blue-chip stocks to suffer the ignominy of receiving a 'first strike' against its remuneration report. Chairman Michael Chaney admitted to disappointment at the strike, telling shareholders that most of the opposition had come from overseas investors.

- Clive Palmer’s nephew Clive Mensink told the Queensland Supreme Court that the businessman was legally allowed to dodge paying hundreds of millions in debts owed by his Queensland Nickel Pty Ltd to ex-employees and suppliers. Mr Mensink also admitted that QN would “probably” not pay its debts and that when he was running the refinery, an exhaust stack at risk of collapse was not fixed.

- Rio Tinto cut its iron ore production guidance for next year by as much as 20Mt but said it remained on track to meet output guidance for 2016. BHP cut its iron ore guidance by 10Mt to 260Mt due to bad weather and rail maintenance.

- Woodside Petroleum suffered a 30% drop in sales to $1.3b in the March quarter as the impact of lower oil and LNG prices hit home. This was despite an 8.7% rise in production to 23.7 million barrels of oil equivalent.

- BHP revealed it may spend up to $US1b on offshore oil exploration next financial year after securing a second drill rig that will let it test big targets in the Gulf of Mexico and Trinidad in Tobago at the same time.

- MMG boss Andrew Michelmore said commodity prices had probably  bottomed and he continued to see demand growth in zinc.

- The administrators of troubled steel and mining group Arrium revealed they are negotiating with its lenders to secure funding of about $200m to ensure the company is able to continue its normal business operations.

- Alinta has signed up to buy natural gas from Chevron's $US29 billion Wheatstone LNG venture, reducing one of the perceived risks for the buyer of the Western Australian gas retailer, which has been put up for sale.
 
- The United States and seven other countries called on Tuesday for urgent action to address global steel overcapacity, a day after China and other major steel producing countries failed to agree on measures to tackle an industry crisis.

- BHP spin-off South 32 cut third-quarter production at several businesses but said it remained on track to meet its full-year guidance across all its units.

The countdown to Resources Rising Stars is on….
 
First it was gold, which took everyone by surprise. Then it was lithium’s turn, with global markets now in the midst of an unprecedented boom. Now zinc is on the move. And there are clear signs of life in other commodities too. Even iron ore has joined the party, up more than 40 per cent so far this year.
 
With top fund manager Hedley Widdup this week declaring that miners are at the “turning point” and that the famous Lion Clock has struck 5 (see Ten Bagger above), there’s never been a better time to register for Australia’s biggest retail investment forum for the mining industry, Resources Rising Stars Gold Coast.  
 
Weekly Wrap readers are invited to register for this landmark event, which is free for investors and will be held on Tuesday 24th and Wednesday 25th May 2016 at the iconic Royal Pines Resort on the Gold Coast. Keynote speakers include Chris Richardson (Deloitte Access Economics), fund manager Hedley Widdup (Lion Selection Group), resources analyst Mark Gordon (Breakaway Research) and resources journalist Paul Bartholomew (Platts). Presenting companies include Northern Star Resources (NST), Sandfire Resources (SFR), Saracen Minerals (SAR), Pilbara Minerals (PLS), Millennium Minerals (MOY), FAR Ltd (FAR) and Atlas Iron (AGO). There will be opportunities for investors to speak directly to company executives at the conference over the two days, with free registration also include tea & coffee, lunch and networking drinks at the end of each day. Plus don’t miss the Self-Managed Super Fund (SMSF) Master-class being hosted by Spring Financial Group and the Hole-in-One competition on the Royal Pines Golf Course.
 
To register, CLICK HERE.
 
To view our promotional video, CLICK HERE.
News Wrap
Ardiden (ASX: ADV) – Grades of up to 4.1% lithium dioxide at Seymour Lake 
Ardiden has received outstanding initial results from the recently completed maiden drilling program at the Seymour Lake Lithium Project in Ontario. Partial assays received from two diamond drill holes in the 6-hole program have confirmed the presence of significant high-grade lithium mineralisation, including grades of up to 4.1% Li2O. The first hole, SL-16-41, intersected 19m of mineralisation including an intersection of 8m at 1.7% Li2O. Additional assay results are due to be received shortly with further metallurgical testing to be undertaken. Read more
 
Cradle Resources (ASX: CXX) – Definitive Feasibility Study on Panda Hill 
Cradle announced the results of the Definitive Feasibility Study (DFS) for its 50%-owned Panda Hill Niobium Project in Tanzania. The DFS incorporated results of extensive investigations and feasibility work carried out since 2012. Key results of the DFS include a Life-of-Mine average EBITDA of US$112M pa, initial capex of US$196M and an average LOM production of 5,400tpa contained niobium. The DFS demonstrates a highly economic and robust project. An off-take agreement is well advanced for Panda Hill and project debt financing is also well underway. Read more
 
Energia Minerals (ASX: EMX) – Positive Scoping Study completed for Gorno Zinc Project
Energia has received positive results from an Independent Scoping Study completed by mining consultants Jorvik Resources for the Gorno Zinc Project in northern Italy. The study focused on the Mineral Resource currently defined with the Colonna Zorzone deposit, confirming the Company’s belief in Gorno’s competitive advantages. As a result, Energia has decided to proceed with a Definitive Feasibility Study this year. The DFS will incorporate additional resource definition, environmental studies, additional metallurgical test-work and process plant design. Read more
 
FAR (ASX: FAR) – Completes $60M capital raising 
FAR completed a $60M placement to institutional and sophisticated investors. The placement, which was arranged by Bell Potter and RBC Capital Markets, was oversubscribed with strong support from existing shareholders and the introduction of new institutional investors to the register. Proceeds will be used to fund FAR’s continued participation in the drilling and evaluation program offshore Senegal. MD Cath Norman said: “It is a testament to the quality of the Senegal project that FAR has successfully completed this capital raising in a tough market for oil explorers and developers”. Read more
 
Kairos Minerals (ASX: KAI) / Mining Projects (ASX: MPJDA) – Expands lithium footprint 
The newly renamed Kairos Minerals (formerly Mining Projects Group: MPJ) has strengthened its strategic position the East Pilbara lithium province of WA with applications lodged for eight highly prospective tenements following an extensive regional targeting exercise by the Company’s technical team. The new tenement areas lies within a 60km radius of the world class Pilgangoora Lithium-Tantalum Project, currently being developed by Pilbara Minerals (ASX: PLS). Ground-based fieldwork will commence shortly. The name and code change becomes effective on 29 April. Read more
 
Red 5 (ASX: RED) – Siana Underground Feasibility Study on track for delivery in June
The updated to the Feasibility Study for the proposed underground mine development at the Siana Gold Project in the Philippines in on track, with delivery scheduled for the June 2016 Quarter. The Study is being completed by Mining One and will represent a comprehensive update to the original Feasibility Study completed in 2009. Subject to the successful outcome from the updated Feasibility Study, underground development activities are expected to commence in the second half of the 2016 calendar year. The underground resource comprises 3.8Mt at 5.8g/t for 704,000oz. Read more
 
Saracen (ASX: SAR) – Thunderbox costs fall following purchase of royalty
Saracen has exercised its pre-emptive right to buy the Norilsk Net Smelter Return royalty of 1.5% relating to the Company’s 100%-owned Thunderbox Gold Project in WA. The acquisition is anticipated to reduce all-in sustaining costs at Thunderbox by ~A$25 to ~A$1000/oz. Thunderbox’s commissioning is almost complete with commercial production anticipated in the current June Quarter, doubling total group production to an annualised rate of ~300,000ozpa. Saracen MD Raleigh Finlayson said the purchase of the Norilsk royalty would enable Saracen shareholders to receive the full economic benefits of Thunderbox’s production. Read more
 
Vital Metals (ASX: VML) – Identifies exciting gold potential at Watershed 
A recent exploration data review at Vital’s Watershed Tungsten Project in Queensland has identified exciting gold exploration potential. The review identified numerous gold exploration targets within tenement EPM 19089, with 11 gold-bearing vein systems outlined over 1.5km at the key Elephant Creek prospect. Historical drill intercepts of up to 4m at 14.5g/t Au were returned from this area. Field mapping and sampling programs are now planned to identify priority areas for drilling. Historical gold production from the Hodgkinson field to the south has been reported at 300,000oz. Read more
 
Windward Resources (ASX: WIN) – Initial exploration programs commence
Windward has commenced a new exploration program designed to further evaluate the newly identified coincident, gravity, geochemical and structural anomaly within the Western Margin prospect, part of its 70%-owned Fraser Range North Project in WA. An IP geophysical survey is scheduled to commence in May, to detect potential areas containing disseminated and massive sulphides. Aircore drilling is also planned to commence in May, with in-fill drilling to be undertaken on spacing over selected areas. The newly identified area lies 3.5km east of the Nova nickel deposit. Read more
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