The market for junior explorers has been fairly gloomy so far in 2024 but if there’s one thing the sector has demonstrated time and time again, it’s resilience.
In the final months of 2023, gains in the junior sector were driven by frenzied interest in the lithium market, which has since cooled as the lithium rout hits operating mines.
“The good performance in December, when we seemed to have turned the corner, has been met with a baseball bat in January,” Far East Capital’s Warwick Grigor noted on Saturday.
“That has come as a surprise to most of us, including me.”
Grigor noted the large-cap mining stocks were performing well but wondered when that might trickle down to the juniors.
“The failure of many zombie stocks might clear the decks, but it will still hurt the confidence of those who have been hoping for a recovery,” he said.
“Another bout of fundraising on any recovery in share prices will divert liquidity into those issues.”
Grigor said finding the next crop of outperforming stocks would be more rewarding than waiting for a recovery.
RIU Explorers Conference
As well as being one way to find the next hidden gem, the RIU Explorers Conference, being held in Fremantle next week, will be a great measure of sentiment in the small to mid-cap arena.
The line-up includes 90 company presentations, spanning from the smallest of microcaps through to ASX 200 producers. There’s sure to be something for everyone with gold, lithium, copper, nickel, rare earths, uranium, high-purity alumina, graphite, zinc, cobalt and even helium represented.
The event will also feature keynotes from Canaccord Genuity, Hamilton Locke, ANZ, BDO, BHP Xplor, ABC Refinery, S&P Global Market Intelligence, ERM Australia Consultants, SRK Consulting and Noah’s Rule.
Day one will see the presentation of the Craig Oliver Award, which has been handed out since 2011 in honour of the late Sundance Resources finance director.
This year’s nominees are nickel-copper explorer-turned-lithium explorer and takeover target Azure Minerals, newly minted uranium producer Boss Energy, ASX 200 gold sector newcomer Genesis Minerals and high-grade New Zealand gold explorer Santana Minerals.
Despite the subdued market for juniors so far in 2024, organisers Vertical Events are expecting more than 2000 delegates in Fremantle next week, including a strong interstate and overseas contingent.
The state of exploration
According to S&P Global Market Intelligence, global non-ferrous exploration budgets were fairly steady in 2023 after reaching a nine-year high in 2022.
Budgets last year fell by just 3% to US$12.8 billion. Gold budgets dropped by 16%, offset by a jump in exploration for green metals, including a 77% surge in lithium budgets.
Copper budgets rose by 12% to $3.12 billion, the biggest year-over-year jump since 2014, and the third consecutive year of double- digit percentage growth, while nickel budgets rose by 19%.
Budgets for grassroots exploration fell by 9.8% due to a tightening of equity markets making it harder for juniors to raise money.
S&P expects exploration budgets in 2024 to remain steady once again though if current financing conditions remain as they are, a sub-5% fall in budgets this year would be the most likely scenario.
However, it only takes one discovery to rev up a weak market.
Sirius Resources surged by more than 4000% in 2012 – during a bear market – when it announced the discovery of the Nova nickel-copper deposit.
Similarly, Chalice Mining announced the discovery of the Julimar nickel-copper-platinum group element deposit on the same day as the COVID-19 global market crash in 2020. At its peak, Chalice shares were up nearly 5000% and to this day, it remains the only pre-resource explorer ever to crack the ASX 200.
With drilling rates still at elevated levels, the next discovery could be just around the corner. And as they say, a rising tide floats all boats.
To find out more about the RIU Explorers Conference, go to: www.riuexplorersconference.com.au
