Ram Resources Keel zinc project provides good exposure to a resilient metal
Published 05-MAY-2017 14:46 P.M.
|
3 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
After emerging as the best performing base metal in calendar year 2016, despite a slightly bumpy start to 2017, zinc remains the best performing base metal on a year-on-year basis with its price having risen nearly 40% from approximately US$0.85 per pound to US$1.17 per pound.
By comparison, after the recent pullback in the nickel price it is close to line ball with where it was 12 months ago, while copper’s current price implies a year-on-year increase of approximately 15%.
The second best performing base metal behind zinc is lead, being the metal that tends to mirror zinc the most in terms of price movements. It is up nearly 30% on a year-on-year basis.
Last week, analysts at Macquarie came out with some positive commentary regarding ‘sharp inventory outflows, mostly from Guangdong (China) warehouses’.
The broker is forecasting a zinc price of US$3100 per tonne by the fourth quarter of 2017 and it expects this level to be maintained in calendar year 2018. This compares with current levels in the vicinity of US$2600 per tonne.
If the second half (2017) surge in the zinc price occurs as it did in 2016, we should again see stocks exposed to the metal rerate strongly, particularly if there is the circa 20% increase implied by Macquarie’s projections.
Is Ram Resources’ three month/60% gain about to be extended?
Shares in Ram Resources (ASX: RMR) soared in February after the company negotiated an agreement to acquire an 80% interest in the Keel zinc project located in Ireland on territory adjacent to a number of the largest zinc producing projects in Europe.
It should be noted that as of Monday, May 8, Ram Resources will be trading under the company name Longford Resources (ASX: LFR).
While LFR’s shares are still up 60% on a three month basis, they have trailed off from a high of 7 cents on March 9 to 4.8 cents.
However, this has been under low volume sporadic selling of less than 500,000 shares a day, unlike the circa 17 million shares that were traded when its share price doubled from 3 cents to 6 cents in a day (February 7) after the Keel deal was announced.
It should be noted here that any broker projections in this report are only estimates and may not be met. Also, share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
Management announced this week that its drilling program had just commenced with the first seven diamond drill holes aimed at confirming known mineralisation.
LFR is looking to grow and upgrade the current inferred resource of 6.9 million tonnes grading 5.6% zinc and 0.8% lead.
With an established resource under its belt, vast expanses of known mineralisation, and a data bank gleaned from 268 historic drill holes featuring 250 occurrences of zinc grades in excess of 2% across 40,000 metres of ground, LFR has an attractive advantage in terms of establishing a strategically focused drilling campaign.
Consequently, it wouldn’t be surprising to see LFR’s shares recommence their growth trajectory in coming weeks as assay results come to hand and investors gain a feel for the likely quantum and timing of the establishment of a maiden JORC resource which management hopes to achieve by the third quarter of 2017.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
