WA Index

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WA Index

Issue 199 | April 2021

Welcome to the 199th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies fell 4% over the month of March 2021, to close at $264.4bn. This movement bucked the trend of global indices, which achieved increases over the month. The WA Index’s strong tie to the resources industry, especially gold and iron ore, hurt this month as both commodities saw pricing retraction through March.

Download the list of WA’s top 100 listed companies, as of 31 March 2021, explore the sections below and if you do not currently receive our WA Index,  please register to be added to our distribution list.

Highlights:

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

As of 31 March 2021

Commodity review

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  • LNG prices closed at US$7.02/mmbtu, representing an 18% increase over the month of March. Demand has been driven by Asia, with plans to have net-zero commitments by reducing coal usage. Instead, LNG as a cleaner, more cost-effective alternative has increased demand and pushed prices up. Additionally, the recent blockage of the Suez Canal has brought uncertainty and volatility to the market. Although it is unclear exactly how much supply impact this has had, speculation has been strong enough to impact perceived supply levels and increase the price.
  • Tin saw a 16% increase in March, closing at US$27,538/MT and finishing the month as one of the highest performing metals on the London Metals Exchange. This rise was due to dwindling stockpiles and strong industrial demand, especially in electronics. Other factors driving up the price included the political unrest in Myanmar which has shut down tin production, and China's increased appetite for tin imports, which rose 520% in 2020.
  • During March, coal prices climbed 8%. After recent flooding on Australia’s east coast, rail freight was disrupted, impacting the supply of coal to Asia. Demand at this time of year in Asia is usually high due to preparations for the monsoon season. In addition, South Korea has forecast an increase in demand after closing some of its nuclear power capacity.
  • There was a 5% decrease in the price of iron ore during March to US$166/t. China's crackdown on pollution has put significant pressure on its major steel producers, resulting in speculated demand weaknesses to come. China has planned to half the country's emissions, with companies that fail to comply facing the risk of losing production permits.
  • Nickel prices experienced a 14% decrease in March, closing at US$16,022/MT, and due in part to the calming of shortage concerns across multiple commodities. China's slowing of industrials demand has seen cooling across the sector, and nickel prices dropped 9% in a single day on 4 March 2021, when Tsingshan Holdings Group announced there would be ‘over-capacity’ of the metal in coming months. Globally, demand has been declining, with the Philippines now the default leading exporter, after Indonesia introduced export bans, forecast to increase production to 550,000 tonnes in 2025, and increases in nickel stocks at the LME.

Performance of WA Index and global indices

Performance of WA Index and global indices
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WA Index movement

WA Index movement
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Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

  • Chalice Mining Limited's market capitalisation increased by 14% over the month of March. Strong results were reported at its Julimar project, with electromagnetic surveys locating new clusters of nickel-copper/palladium. These results have also highlighted the potential for the current project to expand further north. Also during March, an earn-in agreement was announced with Metal Hawk Limited for a gold mining tenement 30km east of Norseman. The agreement gives Chalice the ability to earn-in up to 70% interest.
  • Over the course of March Piedmont Lithium Ltd's market capitalisation increased by 10%. Early in the month, Piedmont released its scheme booklet for re-domiciling from Australia to the US. Following this, the company completed an underwritten public offering to raise a total of US$122.5m (A$159.1m). This raising is planned to be used for the development of the company’s North Carolina lithium project, including feasibility studies, test work, permitting and further drilling. Piedmont also announced the commencement of a Definitive Feasibility Study (DFS), expected to be completed in Q3 2021.
  • With an increase of 16%, Ramelius Resources Limited was also a large mover in March. Euroz Hartley’s presentation during the month compared Ramelius to eight other ASX-listed gold producers, and named Ramelius number one in both return on capital employed and return on equity. The market capitalisation increase was also in anticipation of strong production results announced subsequent to the end of the month, confirming Ramelius achieved its production guidance for the quarter.

Major index players
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The top Deloitte WA Index Movers and Shakers in November were:

  • Over the course of March, 88 Energy Limited saw a 689% increase in market capitalisation, closing at a historic high of $864m. The first sign that March would be fruitful came with the announcement that drilling had commenced at the Peregrine project’s Merlin-1 well. Later announcing that drilling data from Merlin-1 indicated multiple potential hydrocarbon bearing zones in the area saw the Company close the month strongly. It should be noted, however, that the market capitalisation subsequently fell following an announcement that the Company was unable to recover hydrocarbon samples from two significant zones.
  • Element 25 Limited’s market capitalisation increased by 29% over the month, closing at $325m. Investor confidence soared after the March 2021 investor presentation provided further information on the Butcherbird manganese project, following stage one commissioning advancements from the previous month. Furthermore, the company raised $35.5m of capital to fund the Butcherbird stage two expansion.
  • The market capitalisation of Dacian Gold Limited surged 28%, closing at $268m. This strong performance has been the product of the merger of Dacian and NTM Gold Limited. First announced in November 2020, and completed on 17 March, it saw all eligible NTM shareholders receive one new Dacian share for every 2.7 NTM shares held on the scheme record date.

Top performers of the month
Select above image to enhance the Top performers of the month

If you don’t currently receive our WA Index, you can register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

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