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Share Watch – 22 August 2021

Locksley Resources (ASX:LKY)

The global economic recovery, coupled with the mass adoption of lithium batteries in the EV sector, has seen copper rally as much as 120 per cent from the crash of March 2020.

Copper is heavily used in the manufacturing of a wide range of goods, and the strong demand for the metal is perceived as a sign of economic health. Hence the nickname ‘Dr Copper’.

The outlook is extremely strong, says Barclay Pearce Capital equities trader, Joseph Raad. “EVs contain approximately four times as much copper as conventional cars,” he says.

“2020 saw the global electric car stock reach 10 million units, a 41 per cent increase from 2019, and a conservative EV outlook by 2030 suggests that such stock will reach approximately 150 million vehicles and account for 7 per cent of the global vehicle fleet.”

The significant outpace in demand has left many analysts forecasting copper market deficits amid further declines in inventories over the coming years. The price of copper could soar above $US20,000 per tonne, says Raad, up from a current price of ~$US9400/t.

The 470km2 ‘Tottenham’ copper gold project in NSW is a historic site, largely underexplored by modern standards.

The recently listed stock has set an initial exploration target at the ‘Carolina’ and ‘Mount Royal’ deposits of 90,600 gold ounces and 86,100 tonnes of copper.

Early drilling priorities include upgrading this potential project resource to JORC 2012 standards and extending it with immediate exploration.

Sandfire Resources (ASX:SFR)

Sandfire exceeded annual copper production guidance at its Degrussa mine in WA, producing 70,845 tonnes of copper and 39,459 ounces of gold for FY21. Its revenue rose by 24 per cent to a record $813m thanks to surging copper prices.

DeGrussa’s reserves are set to run out in the third quarter of 2022, with Sandfire facing a brief period without production before it opens its Motheo copper mine in Botswana in early 2023.

The $1.2 billion market cap producer has secured the mining licence for Motheo and is now ready for a full-scale construction of the US$279 million ($364 million) project.

Financial indicators

The VIX fear gauge up by 3.11 points since 15 August to 18.56.

The Dow Jones Industrial Average down 88.43 points or 0.25% since 15 August to 35,120.08, the STOXX 600 down 7.03 points or 1.48% to 468.80 and the Shanghai Composite index down 88.97 points or 2.53% to 3,427.33.

Gold up to 1,782.60. US 10-year Treasury Bonds down to 1.261 and oil down to 62.25. Cryptos Bitcoin up by 2,114 points or 4.54% to 48,652.

ASX 200 down 168.00 points or 2.20% since 15 August to 7,460.90. The Aussie dollar down to 71.33 US cents.

Carbon Market Spot Prices

LGC $33.95                                                                 STC $38.90

ESC $37.00                                                                 VEEC $70.00

ACCU $22.60                                                              EU ETS €53.50 (down €2.76 this week)

NZU $NZ49.75 (up $0.05 this week)                            UK ETS GBP47.04 (down 1.46 this week)

Sources: RenewEconomy, demandmanager,  Reuters, SMH, Market Watch, Ieta, Stockhead

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