WA Index

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WA Index

Issue 203 | November 2021

Welcome to the 203rd edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies increased by 3% over the month of October 2021, closing at $280.1bn. The increase was driven by rising prices for battery-associated metals, in particular lithium, lead, copper and nickel which all experienced healthy price increases in the month of October. October was also assisted by the broader investor confidence that allowed many companies to raise capital over the month in order to execute on major transactions.

Download the list of WA’s top 100 listed companies, as of 31 October 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 October 2021

Commodity review

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  • Lithium Carbonate prices have continued astrong upwards trend over October, closing the month at US$25.5/KG, representing a 15% increase on September figures. This sustained growth is attributed to the ever-increasing demand for the material essential to support the surging electric vehicle (EV) market in conjunction with severely tightened global supply due to workforce shortfalls and production delays. Consumption of lithium is expected to increase sixfold by 2050, according to analysis by the International Monetary Fund, and Australia is a top-three global holder of lithium reserves. Locally, the Pilbara-based Wodgina lithium mine owned by Mineral Resources Ltd and Albemarle Group was announced to be restarting operations in Q3 2022 in a bid to improve demand and ease some pressure on the fast-growing metal market.
  • Lead prices continued to rise across October, with a 14% increase from September prices, finishing at US$25.5/KG. Increasing demand for EVs has been a consistent driver of growth for lead and related metals used in EV components. Technological advances that allow for greater energy storage and adverse weather events that boosted demand for replacement batteries have contributed to the industry’s growth over the month. Supply issues have also driven prices higher, with China’s power cuts and production halts causing a price frenzy across non-ferrous metals as smelter production is reduced by tens of thousands of tons.
  • Zinc prices closed at US$3,430/T in October, representing a 13% increase on September figures. The upward trend for this hot commodity continued, here in WA upon the announcement from Strickland Metals of a discovery of high-quality zinc deposit at the Earaheedy Basin. Global zinc production saw significant cutbacks due to surging energy prices, an ongoing effect of the energy crisis affecting the northern hemisphere. One of the world’s largest zinc producers, Nyrstar of Belgium, is set to cut production by up to 50% in response to the increasing electricity prices, severely restricting supply. In China’s Yunnan province, severe droughts have caused power shortages, hampering overall production. These supply factors and increasing demand in tandem saw the zinc price reach a near 14-year high.
  • Silver prices rallied across October, finishing at US$24.1/troy oz for a 12% increase over the month. Bolstered by increasing demand in a range of emerging technologies, silver use is forecast to increase to 346 million ounces in 2025. While demand is forecast to stay buoyant in the long term, the overarching risks of soaring energy prices and supply chain disruptions threaten the progress made over the month. With inflation rising steadily, precious metals like gold and silver have been boosted as attractive alternate assets.
  • Thermal Coal prices retreated in October, with a closing price of US$168.7/MT, an 18% decrease from the prior month. In China, the nation’s economic-planning agency met with industry to develop and discuss measures to slow down coal price growth amid its ongoing power shortages, including mandating production boosts and price caps. In the US, the Biden administration’s commitment to net-zero emissions in 2050 has pulled prices down as other nations follow to reduce their dependence on coal and transition to clean energy alternatives.

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

  • Liontown Resources Ltd market capitalisation grew 32% across the month of October. Liontown had a busy month with the successful demerger of its non-lithium exploration assets in the Julimar Province of Western Australia via Minerals 260 Limited. The company trended upwards in line with other lithium-based companies, riding a 15% climb in the lithium prices over the month of October.
  • Sandfire Resources Limited achieved an impressive 149% increase in its market capitalisation during the month ended 31 October 2021. The company has recently acquired the MATSA Mining Complex in Spain, a strategic acquisition which enables Sandfire to scale as a base metal producer. Sandfire further continued its October streak, following its quarterly activities report release toward the end of the month.
  • De Grey Mining Ltd upgraded its market capitalisation by 30% during the month of October. This was attributed to the company settling and receiving funds for its $125 million placement. This raising will be utilised in undertaking both a Pre-Feasibility Study and continued exploration at the Mallina Gold Project.

The top Deloitte WA Index Movers and Shakers in October were:

  • West African Resources Ltd delivered a 39% increase in market capitalisation during the month of October. This increase is a direct result of the company’s successful capital raising during the month of October to acquire 90% of the Kiaka Gold Project, a large scale permitted development project with a 6.8Moz gold Mineral Resource. Funds are also intended to repay their outstanding syndicated debt facility with Taurus Mining Finance Fund LP.
  • Vimy Resources Limited delivered a 34% increase to its market capitalisation following the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS) approval of its Mining Proposal for the development of the Mulga Rock Project. The approval allows Vimy to kick-off development and operations at the site, representing a significant step for the advancement of the project.
  • Argosy Minerals Limited increased its market capitalisation by 71% during October. On an operational note, Argosy announced during the month that it has completed 40% of its first commercial production of modular 2,000tpa lithium carbonate at their Rincon Project. As a lithium producer, Argosy Minerals Limited also benefited from the climb in lithium prices during 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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