I’ve provided assistance to independent research house, Independent Investment Research (IIR), with respect to the preparation of their latest ‘Blue Book’ – which provides investors with analysis of more than 50 small and mid-cap resources sector companies for consideration within their investment portfolios.
The report covers the maturity spectrum – from exploration through to production companies, across commodity classes and operating jurisdictions. There’s also a strong commodity focus, with the report providing 2017 price forecasts for major base and precious metals. The key theme for 2017 is likely to be volatility amidst improving demand and supply fundamentals, as well as the ‘Trump Effect’ and the reactions of both the US and global economies to key policy settings.
Comment by IIR Analyst, Mark Gordon, said: “2016 has played host to a significant resource sector rejuvenation. Quality smaller companies are once again able to raise funding for exploration, appraisal and development activities, markets are reacting positively to favourable company news, and share prices are now moving in the right direction.”
IIR’s ‘Blue Book’ highlights that the high-quality smaller companies are outperforming the sector’s heavyweights, given some have been subject to poorly-times project expansions, and in some instances, higher cost of capital or falling commodity prices.
However, smaller companies with management as key shareholders are often managing costs more effectively, and many are leveraged to better performing commodities. These include gold (up 10% over the year to date), copper (up 33%), silver (up 20%), nickel (up 30%), cobalt (up 28%), lead (up 34%), crude oil (up 45%), tin (up 45%) and zinc (up 78%), along with lithium and graphite grabbing the attention of investors.
“2016 has been an outstanding year for commodities and there’s every indication that this positive momentum will continue into 2017. The key commodities to keep an eye on in 2017 are gold, lithium, graphite, nickel and zinc, and given recent price movements, possibly copper. Australian miners should also continue to benefit from strong commodity prices in Australian dollar terms – this also applies to other jurisdictions that may depreciate against the US dollar,” Mr Gordon said.
The report also provides 2017 term price forecasts for major base and precious metals, including:
- Gold: above US$1,200/oz and possibly up to US$1,500 from the current price of US$1,175
- Copper: At or above US$5,500/tonne down from its current price of US$5,800/tonne
- Zinc: US$2,200 – US$2,400/tonne down from the current price of US$2,800/tonne
The report highlights that the key theme for 2017 will be volatility amidst the improvement of demand and supply fundamentals, as well as the ‘Trump Effect’ and reaction of the US and global economy to key policy settings. The report analysts outline that the positivity witnessed in commodity markets is overdone, despite the near-term enthusiasm given speculation of infrastructure spending increases.
“We believe the hard-won recent gains for bulk commodities like iron ore and coal will subside during 2017, as supply is abundant and there have been temporary factors within China that have sucked in imports and supported price increases,” Mr. Gordon concluded
I hope you find the report both useful and interesting clck here to download.
.jpg)
