Western Australia consistently ranks as one of the best jurisdictions for mining investment in the Fraser Institute’s yearly survey. South Australia also ranks in the top 10.
The Canadian think tank uses several criteria to determine the most hospitable locales for mining investment. The annual list is often a precursor to increased mining activity in top-ranking regions.
“The mining survey is the most comprehensive report on government policies that either attract or discourage mining investors,” explains Ashley Stedman of the Fraser Institute in the report.
“A sound regulatory regime coupled with competitive taxes are key to making a jurisdiction attractive to investors,” added the senior policy analyst.
Australia’s resource sector has a longstanding history that has asserted the nation as the leader in aluminum and tantalum output. The country is second in terms of uranium, lithium and zinc, and is a formidable producer of iron ore, diamonds and gold as well.
A recent capital markets release from Canaccord Genuity lists 23 Australian stock picks. It’s no surprise that the rundown includes six mining companies that are well known in their respective sectors.
Below the Investing News Network lists the six resource firms mentioned with a brief overview of their recent activity. All details for these ASX mining stocks to watch were accurate as of August 18, 2021.
1. Adriatic Metals (ASX:ADT)
Market cap: AU$597.51 million; share price: AU$2.63
Precious and base metals explorer Adriatic Metals owns the Vareš silver project and the Raska zinc deposit, both in Southeastern Europe. The company is expected to deliver a definitive feasibility study for Vareš in Q3. The project includes the Rupice deposit, for which Adriatic recently optimised an underground mine plan outlined in a 2020 prefeasibility study; this resulted in a 26 percent increase in the silver equivalent metal that can be mined in the first 24 months of operations.
Canaccord reported that “(f)inancing is also progressing with several non-binding term sheets already received from project financiers.” Adriatic expects to receive an exploitation permit for Rupice in Q3.
2. Bellevue Gold (ASX:BGL)
Market cap: AU$777.27 million; share price: AU$0.91
Bellevue Gold is developing a high-grade gold system in Western Australia’s Goldfields mining district. Since the first discovery hole in late 2017, the company has quickly proved up a mineral resource of 3 million ounces of gold at 9.9 grams per tonne (g/t) from 9.4 million tonnes. Bellevue is looking forward to an updated feasibility study in the third quarter of the year.
“With a growing high-grade Resource and Reserve base, pragmatic mine plan that should materially improve over time and growing management team of high calibre professionals, we continue to see BGL as an exciting development proposition,” said Canaccord analysts.
3. Boss Energy (ASX:BOE)
Market cap: AU$330.35 million; share price: AU$0.15
Boss Energy is moving toward restarting production at its fully permitted Honeymoon uranium project in South Australia. The company recently released a study looking at bringing the project back online. and has advanced production preparations with detailed engineering designs and procurement contracts.
Canaccord said is “confident that Honeymoon will be one of the first projects to restart as the market tightens,” basing its outlook on a “~12-month lead time to first production, bottom quartile capital intensity and low (all-in sustaining cost) of US$26/lb.”
4. Orocobre (ASX:ORE)
Market cap: AU$3.11 billion; share price: AU$9.03
Orocobre has developed a large-scale brine-based lithium production operation in Argentina’s Lithium Triangle. The Olaroz lithium facility hosts a measured and indicated resource of 6.4 million tonnes of lithium carbonate equivalent, which the company says “is capable of sustaining current production levels for 40-plus years with only approximately 15 percent of the defined resource extracted.”
Orocobre’s planned merger with lithium heavyweight Galaxy Resources (ASX:GXY) is anticipated to place the newly combined company into the ranks of the world’s top five lithium chemical producers by 2025, as per Canaccord, whose analysts see the resulting company “delivering significant earnings growth (CGe EBITDA +1,700% to ~US$600m by 2025E) from a globally diversified pipeline of brine and hard rock assets and higher value product mix.”
5. OZ Minerals (ASX:OZL)
Market cap: AU$7.33 billion; share price: AU$22.01
Copper-focused OZ Minerals is Australia’s third largest producer of the red metal. The ASX mining stock to watch owns and operates the Prominent Hill copper-gold mine, as well as the Carrapateena copper mine; it also has assets in Brazil. Additionally, it is developing a pipeline of earn-in agreements with exploration companies in Australia and internationally.
Canaccord is looking forward to a number of catalysts for OZ in Q3, including a Prominent Hill expansion study and final investment decision. Canaccord expects the study will deliver an increase in production from 4 million to 5 million tonnes per year to 6 million tonnes per year. OZ is also expected to provide updates on the West Musgrave copper-nickel project in Western Australia, the Carajas East hub in Brazil and the CentroGold project, also in Brazil.
“OZL is reinvesting in extension and expansion projects over the next five years, which restricts free cash flow,” said Canaccord in its report. “However, while copper prices hold over US$4/lb, we would expect positive cash flow from the business. We project this growth leads to a doubling of OZL’s copper equivalent production over the next 10 years.”
6. Perseus Mining (ASX:PRU)
Market cap: AU$1.8 billion; share price: AU$1.47
Perseus Mining has three operating gold mines in West Africa: Edikan in Ghana, and Sissingué and Yaouré in Côte d’Ivoire. Yaouré is the company’s most recent mine to come online, pouring its first gold in December 2020 and entering commercial production ahead of schedule in early 2021.
Perseus is planning a ramp up in Yaouré’s production run rate in the second half of the year, to reach approximately 500,000 ounces annually — a more than 50 percent year-over-year increase. “We estimate a ramped up Yaoure to drive substantial lift in earnings/FCF (FY22E FCF yield 26%), while potential for mine life extensions (Sissingue) could provide near term valuation levers,” said Canaccord.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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