Brought to you by BULLS N’ BEARS
Andrew Todd
Dire straits in the Strait of Hormuz.
Turns out the skinny little waterway – the one funnelling 20-25 per cent of the world’s oil and a hefty chunk of LNG – really is the artery the global economy can’t live without.
And when Iran starts lashing out at anything floating within drone range, the whole system goes berserk.
Oil absolutely went full rocket mode as oil tankers and cargo ships ground to a halt, blasting 25 per cent higher to reach US$115 a barrel for Brent early in the week.
The ensuing panic pricing frenzy really got out of hand.
Monday morning was pure carnage.
Global markets hit the panic button hard as burgeoning crude prices sent inflation alarm bells ringing – liquid gold remains the ultimate bellwether for global inflation, a problem that might not be going away anytime soon.
The ASX opened ugly, shedding almost five per cent at one stage on Monday before clawing back to a still-brutal three per cent loss on the day.
By week’s end, our commodities-heavy index was still nursing losses, now down 8 per cent since the start of the month when the war in Iran first erupted.
Back home, petrol has hit $2.50 a litre, making all and sundry a driveway geopolitical analyst.
As shortages roll in, the Australian Government confirmed it was sitting on 36 days’ worth of petrol, 29 days of jet fuel and 32 days of diesel – numbers that suddenly felt a lot less comforting.
Amidst the panic, Canberra cracked open the emergency stockpile, releasing seven days of petrol and five of diesel to take the edge off the bowser.
Even the Yanks are playing the pragmatism card, as US President Trump gave the green light to buying Russian oil again – all is forgiven, it seems, if it keeps Brent under US$100.
Clean energy dreams also flew out the window this week amid the economic stress, as coal companies came roaring back to life.
And with inflation now firmly back in the driver’s seat, rate hikes are suddenly looking likely on the RBA’s agenda next Tuesday. Pressures are mounting and the market is feeling it.
Our Runners roundup this week was, unsurprisingly, pretty thin on the ground amid all the red ink. Only a select handful of hardy survivors have come out unscathed, led by an ASX-listed Alaskan oil dark horse that’s absolutely revelling in these black gold prices and finally getting its moment in the sun.
88 ENERGY LTD (ASX: 88E)
Up 110% (2.2c – 4.6c)
The Bulls N’ Bears Runner of the Week is Alaskan oil baron 88 Energy. While everything else was caught in a sea of red on Monday, 88 Energy was charging ahead with the spiking oil price.
As oil surged 25 per cent, 88 Energy’s share price more than doubled after news hit the market of its proposed oil hub on Alaska’s prolific North Slope.
The North Slope is home to some of the largest oilfields in the United States, with the company’s acreage sitting in the same neighbourhood as heavyweight operators such as ConocoPhillips, ExxonMobil and Hilcorp Energy. The company is particularly highlighting the prospectivity of its flagship Prudhoe project near the giant Prudhoe Bay Oil Field.
As the crude prices surged, the narrative around secure domestic US supply took hold and 88 Energy’s shares flew off the shelves on Monday, while almost everything else struggled to catch a bid.
It seems the good news got a little out of hand, and as usual, the market overlords down at the ASX stepped in to play fun police, demanding an explanation for why/how their share price could possibly be going up.
88 Energy batted away the “please explain” and its shares continued on their merry way.
Sitting on a roughly 508-million-barrel oil equivalent opportunity at its South Prudhoe acreage, 88 Energy is pitching what could be a monster prize if the geology ultimately delivers.
Adding to the star project’s credentials, its grounds lie close to established oil infrastructure, including the TAPS Pump Station 1 – the northern gateway to the Trans-Alaska Pipeline System – just 10 kilometres away.
That kind of access to infrastructure can be a major advantage for a small explorer. Discoveries that sit close to existing pipelines and processing facilities can be significantly easier and cheaper to commercialise than remote frontier finds, potentially transforming the major economics of 88 Energy in a drill-proven oilfield.
AGUIA RESOURCES LTD (ASX: AGR)
Up 71% (1.4c – 2.4c)
Snagging silver on the week is South American gold and fertiliser producer Aguia Resources, after it edged ever closer to joining the ranks of fertiliser producers in the potash-hungry landscape of southern Brazil.
The company surged on news it had landed a key mining concession for its Três Estradas phosphate project. The government green light sent shares rocketing more than 71 per cent to reach as high as 2.4 cents.
The permit from Brazil’s National Mining Agency clears a major hurdle and leaves Aguia seeking its final operational licence from the state environmental regulator. Approval is expected within the next four to six weeks, paving the way for commissioning of its processing plant by the end of April.
Much of the groundwork is already in place. The Três Estradas site has been ready to roll since December, with environmental compliance in place and key infrastructure now being finalised.
Aguia has also been taking its premium locally sourced Pampafos fertiliser product straight to market, unveiling it at a massive Brazilian growers’ fair.
Despite its agricultural clout, Brazil still relies heavily on imported fertilisers, leaving domestic phosphate supply increasingly strategic.
Aguia says that its Três Estradas is designed to tap into that demand by producing an organic phosphate fertiliser near the country’s major farming regions.
For Aguia, the project also adds a second string to the bow alongside its gold assets in Colombia – giving the company exposure to two commodities whose prices are ripping – and its share price has been following suit.
CHARIOT RESOURCES LTD (ASX: CC9)
Up 43% (10.5c – 15c)
Our final Runner’s podium spot went to pure play lithium pundit Chariot Resources, which went on a tear after the Nigerian government approved the transfer of six lithium licences into a joint venture with its local partners – clearing a key regulatory hurdle for its African lithium push.
The approvals cover four exploration licences and two small-scale mining leases previously held by Continental Lithium, which will now all be rolled into a new vehicle called C&C Minerals.
Chariot says it will hold 66.66 per cent of the JV, with its partner retaining the remaining third.
The company says only a few routine administrative steps remain before the transfers are finalised. Once complete, Chariot plans to move quickly into field programs to begin validating drill targets across the largely undrilled ground.
The 254-square-kilometre portfolio spans four project clusters – Fonlo, Gbugbu, Iganna and Saki – across Nigeria’s Oyo and Kwara states, with plenty of evidence of historical artisanal mining.
The licence approvals fit neatly with Chariot’s dual-track strategy of accelerating modern exploration while keeping a pathway open to early small-scale production backed by offtake partners.
The battery metal dynamo holds a stacked portfolio of assets, including its US lithium assets at the hard-rock Black Mountain project in Wyoming and the claystone-hosted Resurgent project in Nevada, where early surveys have flagged high-grade lithium mineralisation at surface.
With approvals secured and fieldwork imminent, Chariot says its Nigerian exploration could mark the first lithium drilling campaign by an ASX-listed company in the country.
TORQUE METALS LTD (ASX: TOR)
Up 41% (37c – 52.5c)
Rounding out Bulls N’ Bears Runners this week is Torque Metals. The jostling junior WA goldie may have just scored the recruitment coup of a lifetime, luring a star-studded trio of gold hunters from the team that helped turn Spartan Resources into one of WA’s hottest takeover targets.
The company has tapped former Spartan heavyweights Simon Lawson, Craig Jones, David Coyne and exploration kingpin Monty Graham to spearhead growth at its emerging Paris gold project in Western Australia.
In short, the ex-Spartan heads have taken their keen discovery skills from the high-grade Never Never and Pepper discoveries at Dalgaranga – snapped up last year for a tidy $2.4 billion by Ramelius Resources – to the prolific gold ground of Paris near Kalgoorlie.
The team is now locked in on Torque’s sprawling 1200-square-kilometre land package, which remains surprisingly underexplored given its address in one of the world’s most prolific gold belts.
The neighbourhood is hardly short on pedigree either, with the ground surrounded by Tier 1 operations including Northern Star Resources’ giant Fimiston pit, Evolution Mining’s nearby Mungari operation and Gold Fields’ massive St Ives gold mine.
Jones steps straight into the CEO chair and is expected to lead an aggressive exploration push, with additional rigs planned as the company reviews historical data and lines up fresh drilling targets across the Paris ground.
Torque – or Spartan 2.0 – says it is confident in rapidly upgrading the existing resources at Paris and expanding discoveries by running the same Spartan playbook for selling gold companies for billions of dollars.
Since the boys have laid a bet that Torque has the right geology for major gold discoveries, the market has rationally charged in after them, with shares now up some 41 per cent from Wednesday’s announcement.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
