West Australian miners have emerged as some of the best-performing companies on the ASX during the 2023 financial year, capitalising on the global demand for resources. The surging popularity of lithium has driven a wave of takeovers, soaring valuations, the rise of new billionaires, and significant share price leaps.
Leading the pack is Liontown Resources (ASX:LTR), which claimed the spotlight as the top performer on the ASX 200, with an impressive gain of 168.25%. This extraordinary surge was fueled by takeover bids and increased investment seeking lithium opportunities.
The top 10 performers on the ASX were dominated by sectors such as lithium, gold, and nickel. While a few technology stocks also experienced notable gains, the mining and resources sectors outperformed others, with six out of the top 10 performers belonging to this industry.
Notably, Western Australia, the state with abundant mineral wealth, produced most of the highest-performing companies. Six WA-based firms or resources plays with projects in the state secured positions in the top 10.
On the flip side, the worst performers of the financial year included a few traditional industrial companies and former high-fliers that lost their previous star status. Lake Resources (ASX:LKE), despite igniting the share price of other miners, faced challenges related to lithium, leading to difficulties.
Magellan Financial, a renowned funds manager once led by "rock star investor" Hamish Douglass, experienced a decline of 26.55%. Domino's Pizza (ASX:DMP), previously regarded as a hot tech stock alongside its pizza sales, faced fading fortunes. Cromwell Property (ASX:CMW) suffered from the mass exodus from property plays, resulting in a 29.14% decline.
Major setbacks were also faced by casino operators due to corruption scandals and inquiries involving prominent players. Following Crown's removal from the market due to a takeover, Star Entertainment (ASX:SGR) witnessed investor distaste, with shares declining by 55.05% as the second-worst performer of the year.
Liontown Resources emerged as the top performer among the ASX 200's largest companies, concluding the year with an impressive rise of almost 170%. The company, valued at $6.2 billion, is an emerging lithium producer with highly sought-after Kathleen Valley and Buldania lithium projects in its portfolio. A $5.5 billion takeover bid by Albemarle Corporation and the soaring international demand for lithium amid the transition to renewable energy contributed to its remarkable share price surge.
Nickel explorer Chalice Mining (ASX:CHN), also attracted attention with rumours of potential mergers and acquisitions, partly fueled by Gina Rinehart's Hancock Prospecting building a 4.6% stake in the company. Speculation about Andrew Forrest's interest in significant Chalice holdings further added heat to the stock, resulting in a fiscal 2023 gain of 65.61%.
However, lithium proved to be a double-edged sword. Lake Resources experienced setbacks when it announced delays and increased costs for its flagship lithium project in Argentina's Catamarca Province.
This news sent its shares tumbling by 61.78% for the year, further exacerbated by market doubts about its lithium extraction method and the presence of short sellers.
In addition to the mining sector, Domino's Pizza faced a turbulent journey. After reaching highs of over $160 per share in late 2021, the stock fell to around $50 at the start of the 2023 financial year due to profit downgrades, operational missteps, and struggling profitability.
While the company managed to regain momentum and demonstrate upward movement leading into Christmas, disappointing results during the reporting season in February, along with a subsequent profit warning, exerted downward pressure on its portfolio. Domino's concluded the financial year with a decline of 31.72%.
Overall, the 2023 financial year witnessed significant gains for companies operating in the lithium, gold, and nickel sectors, particularly those based in Western Australia. However, traditional industrial stocks and companies embroiled in scandals faced substantial declines.
