The resources sector comprises the energy sector and the metals & mining industry. The S&P/ASX 200 Resources was trading at 5,237.5 on 22 January 2020 (AEDT 01:07 PM), up 0.43%, compared to the previous day’s close. The sector sub-index has generated positive returns over the last one-year, 3-year and 5-year period with returns of 22.66%, 14.36% and 10.13%, respectively.
In this article, we will discuss three resources stocks – NHC, ORE and WGX, and their respective recent updates.
New Hope Corporation Limited (ASX:NHC)
Headquartered in Queensland, Australia, New Hope Corporation Limited is engaged in the exploration, extraction and processing of coal, and exploration, development and production of oil and gas. The company also handles marketing of coal and logistics in New South Wales and Queensland.
Update on Colton Project
On 20 January 2020, New Hope stated that, as announced earlier on 20 December 2020, it was confirmed by the New South Wales Court of Appeal that NHC had not guaranteed the debts of Colton Coal Pty Ltd (in liquidation) and Northern Energy Corporation Limited (in liquidation) as per the company’s Deed of Cross Guarantee.
Wiggins Island Coal Export Terminal Pty Ltd (WICET), NEC, and Colton Coal had served the company with applications looking for special leave to appeal to the High Court of Australia relating to the decision of New South Wales Court of Appeal.
In earlier announcements with respect to the Colton Project, on 21 July 2019, New Hope announced that it was successful in proceedings against WICET in getting a declaration that NHC was not bound by a Deed brought against Wiggins Deed of Cross Guarantee to guarantee the debts of NEC and Colton Coal.
Following this, on 20 December 2019, the Court of Appeal in New South Wales confirmed the Supreme Court’s statement that New Hope had not ensured the debts of NEC and Colton Coal under the Deed of Cross Guarantee.
The company’s stock was trading at $2.020 on 22 January 2020 (AEDT 01:20 PM), an increase of 0.498% compared to the previous day’s closing price. NHC has a market capitalisation of $1.67 billion and ~831.71 million outstanding shares. The 52-week high and low price was noted at $4.500 and $1.985, respectively. NHC has generated negative returns of 6.51% and 21.18% in the last three months and six months, respectively.
Orocobre Limited (ASX:ORE)
Orocobre Limited, listed on the ASX as well as on the Toronto Stock Exchange, supplies lithium carbonate globally and engages in the production of boron. The company has operations in Argentina, and in collaboration with Toyota Tsusho Corporation, it has begun the construction of a lithium hydroxide plant in Japan.
Orocobre Signs Two Contracts for Supply of Lithium Carbonate
On 20 January 2020, Orocobre announced the signing of two long-term supply contracts for battery grade lithium carbonate from the Olaroz lithium facility. TTC (Toyota Tsusho Corporation) inked the two contracts, as it is the sales and marketing agent (joint) for battery grade lithium carbonate production from the facility. The details are as follows:
- Contract 1: Supply of 7,200 tonnes of battery-grade lithium carbonate;
- Contract 2: Supply of 2,880 tonnes of micronised battery-grade lithium carbonate.
As part of the agreements, the total tonnage will be supplied in three years. The first shipments are likely to start in the quarter ending 31 March 2020.
For each of the two contracts, the selling price will be based on an agreed formula. The price will have a floor and a cap and is associated with the market price.
Also, the company released an update on 21 January 2020, highlighting that the counterparties to the contracts are China-based cathode manufacturers, B&M Science and Technology and XTC New Energy Materials.
The company’s stock was trading at $3.660 on 22 January 2020 (AEDT 01:24 PM), an increase of 1.95% compared to the previous day’s closing price. ORE has a market capitalisation of $939.9 million and ~261.81 million outstanding shares. The 52-week high and low price was noted at $4.040 and $2.180, respectively. ORE has generated positive returns of 51.48% and 26.41% in the last three months and six months, respectively.
Westgold Resources Limited (ASX:WGX)
ASX-listed metals & mining company, Westgold Resources Limited is engaged in the exploration, development and operation of gold mines. The company primarily focuses on the Western Australia region.
Westgold Receives Screen Fire Assays for Great Fingall Intercepts
The company announced on 21 January 2020 to have received screen fire assays for the high-grade intercepts at Great Fingall. The assays significantly upgraded the intercept grades. The announcement was in continuation with the 17 January 2020 release.
The 1km+ down-plunge step-out hole from the lowest production levels at Great Fingall has successfully intercepted the Great Fingall Reef with the following updated exceptional results:
- 57m at 10.10 g/t (earlier 7.95g/t) from 1,642.18m - Great Fingall Reef
- 1m at 34.05 g/t (earlier 20.17g/t) from 1,439.7m - Great Fingall Hangingwall Lodes
- 35m at 3.27g/t from 1,493.22m - Great Fingall Hangingwall Lodes
The Great Fingall intercept of 1.57m at 7.98g/t from 1642.18m consisted of a segment of 0.49m at 0.12g/t from 1642.92m which contained several specs of evident gold.
Plans: The company intends to drill further to define the up-plunge zones amid historic mining and the intercepts over the following year. Westgold aims to perform additional activities to assess the potential of base metal in the region.
Update on Substantial Holdings
Westgold announced on 14 January 2020 that Van Eck Associates Corporation and its associates that had become a substantial holder in the company in December 2019, ceased to be the substantial holder.
The company’s stock was trading at $2.310 on 22 January 2020 (AEDT 01:29 PM), a decline of 1.282% compared to the previous day’s closing price. WGX has a market capitalisation of $935.23 million and ~399.67 million outstanding shares. The 52-week high and low price was noted at $2.570 and $0.915, respectively. WGX has generated positive returns of 13.04% and 10.38% in the last three months and six months, respectively.
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