From gold to graphite to zinc to lithium, Australia’s army of “penny dreadful” stocks is rising from the ashes of the mining bust and growing at rates that majors like BHP Billiton and Rio Tinto can only wish for.
Micro miners are posting double or even triple-digit gains, buoyed by a belief that metals prices have bottomed, while companies that managed to come through the downturn are being aided by cheaper labor and operating costs.
“It’s about the growth and the profit that can come very quickly,” said Perth-based retail investor Tim Larmont, who has been dabbling for over two decades in a sector that’s known as a hothouse for day traders and speculators.
“There’s always that expectation it will end tomorrow, but it looks like it could last longer this time. These companies aren’t burning through money like they used to. Anyone that’s survived is more responsible.
“Renewed optimism is reflected in near-record attendance at this week’s Diggers and Dealers mining conference, where some 1,800-plus prospectors, miners and bankers are crowding into the outback town of Kalgoorlie in Western Australia’s goldfields.
Gold miners were like “rock stars”, Evolution Mining chairman Jake Klein told the conference.
“Investors are happy, investment banks love us. I’ve never had more invitations to corporate and sporting events and we’ve even upgraded our accommodation. We used to be in the caravan park.
“Metals prices have started to turn up after years of declines. Zinc is up 41 percent so far this year and nickel up 21 percent, while gold is trading at near record highs in Australian dollar terms.
Small cap gold miners are “absolutely minting it”, said UBS small companies portfolio manager Stephen Wood, while lithium, used in batteries, is grabbing interest as a transition away from fossil fuels….
Source: Australia’s tiny miners rise from the ashes of the bust | Reuters