Canaccord Genuity has shared its best investment ideas for resource investors looking for opportunities during the COVID-19 pandemic. 

The world continues to face uncertainty brought by the impact of the COVID-19 pandemic, with investors trying to look for cues as to where the markets are going and how to manage their portfolios in the current economic climate.

For Greg Galton, Canaccord Genuity’s director of private wealth research, the question investors should be asking right now is not so much if a company is earning less this year, but whether the impact of the coronavirus will decrease its value moving forward.

“Ideally investors should look to own a portion of their portfolio in ‘all-weather’ businesses where the impact of economic externalities on the value of the business is minimal,” he said in a recent report. “These businesses tend to be high quality, wealth creating businesses whose value steadily increase year on year; but importantly this does not mean their earnings must rise every year.”

Canaccord believes Australia has been able to control the impact of COVID-19 effectively in its initial stages, which indicates that it might be well-equipped to handle any future developments and may be in a better position than other countries to recover from the economic crisis.

“While the federal government has offered a significant stimulus package to alleviate the strain on the domestic consumer and employment market, there remains a very high probability that Australia will experience a recession for the first time in 30 years,” Galton’s report to clients reads.

According to the firm, Australian resource stocks are better positioned now than they were heading into the financial crisis of 2007 to 2008, and should outperform on a recovery in global economic growth.

Below is a list Canaccord’s five best investment ideas for resource-focused investors looking for opportunities during the uncertainty of the COVID-19 pandemic.

These ASX ideas reflect stocks that Canaccord believes possess high-quality characteristics, are trading at a discount to the firm’s fair value estimate and are currently exhibiting positive price momentum. All stats and data included were current as of April 29, 2020.

1. BHP (ASX:BHP)

Current price: AU$31.12; year-to-date movement: -20.1 percent

Mining giant BHP extracts and processes minerals and oil and gas with a focus on Australia and the Americas. Its commodities business includes everything from copper to potash.

On April 21, the company released its operational results for the nine months ended March 31, saying it has implemented extensive measures across its operations to keep its people and communities safe from COVID-19. Among other things it has deferred non-critical activities and restricted travel.

BHP, which is still reviewing its guidance for the year, but has already warned it will be lower than the expected AU$8 billion, reported a strong financial position and said its capital and exploration expenditures are flexible at this time.

2. Alumina (ASX:AWC)

Current price: AU$1.54; year-to-date movement: -33.04 percent

Victoria-headquartered Alumina is focused on investing worldwide in bauxite mining, alumina refining and selected aluminium smelting operations through its 40 percent ownership of Alcoa World Alumina & Chemicals (AWAC), which has a production capacity of approximately 14.1 million tonnes per year.

Due to AWAC’s performance in Q1 this year, Alumina received a AU$33.8 million cash distribution, up from AU$27.6 million on the corresponding distribution for the previous quarter.

To preserve cash, Alumina will put all growth capital expenditure on hold for the remainder of 2020, reducing spending by approximately AU$30 million; it will also look to defer a similar amount of non-critical sustaining capital expenditure over the course of the year.

3. OZ Minerals (ASX:OZL)

Current price: AU$8.79; year-to-date movement: -16.92 percent

OZ Minerals is a copper-focused international company that owns and operates: the Prominent Hill copper-gold mine in South Australia; Carrapateena, an iron-oxide-copper-gold underground mine, also in South Australia; and Antasa, a small, high-quality copper-gold mine in Brazil.

In its Q1 2020 report, OZ Minerals said no material production impacts were experienced at its mine sites following the global COVID-19 outbreak, with all operations remaining on track for 2020 production guidance based on current operating conditions.

4. Iluka Resources (ASX:ILU)

Current price: AU$7.17; year-to-date movement: -22.15 percent

Focused primarily on mineral sands, Iluka’s portfolio includes: operations in Australia and Sierra Leone; projects in Australia, Sierra Leone and Sri Lanka; and a globally integrated marketing and distribution network. It also holds a royalty over iron ore produced from specific tenements of BHP’s Mining Area C.

During the current pandemic, Iluka said operational continuity has been maintained, with all mining and processing sites currently operational. In its quarterly review, Iluka also said it maintains a strong financial position, but has withdrawn its previous 2020 guidance.

5. Saracen Mineral Holdings (ASX:SAR)

Current price: AU$4.50; year-to-date movement: 33.54 percent

Australian gold miner Saracen Mineral Holdings holds interests in three mines in Western Australia: Carosue Dam, Thunderbox and 50 percent of the Super Pit.

In its quarterly review, published on April 28, the company reported record gold production of 158,132 ounces at an all-in sustaining cost (AISC) of AU$1,133 per ounce, with production for nine months to March 31 reaching 374,584 ounces at an AISC of AU$1,081 per ounce.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

In exceptional market conditions, Rio Tinto achieves record financial results and declares total interim dividend of 561 US cents per share, 75% of underlying earnings

Rio Tinto Chief Executive Jakob Stausholm said “Government stimulus in response to ongoing COVID-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices. We focused on safely running our world-class assets and supplying products to our customers. This enabled us, despite operational challenges, to deliver record financial results with free cash flow of $10.2 billion and underlying earnings of $12.2 billion, after taxes and government royalties of $7.3 billion. We are further strengthening the portfolio with our commitment to fund the high-quality Jadar lithium project, which signals our large-scale entry into the fast-growing battery materials market. We will pay an interim dividend of 561 US cents per share, representing 75% of underlying earnings.

“We are making progress on our four priorities, identifying opportunities for operational improvement, advancing our ESG agenda, taking important investment decisions and stepping up our external engagement. We are making real and lasting changes to the way we engage, interact and operate and are committed to ensuring that we have strong and positive relationships wherever we do business. We have identified what we need to do to make Rio Tinto a better company for the long term, with the right teams in place to unleash our full potential.”

Keep reading... Show less

Lake Resources NL Bonus Issue to Shareholders

Sydney, Australia (ABN Newswire) – Clean lithium developer Lake Resources NL (ASX:LKE) (FRA:LK1) (OTCMKTS:LLKKF), in recognition of the support received from its shareholders, wishes to advise that it intends to undertake a bonus issue of options (Bonus Options) to all shareholders with an address in Australia or New Zealand (Eligible Shareholders) at 5:00 pm (Sydney time) on the Record Date (set out in the indicative timetable set out below*).

As the Bonus Options will be issued for nil consideration, Lake is raising no capital from their issue. For every ten (10) shares held at 5:00 pm (Sydney time) on the Record Date, Eligible Shareholders will be issued with one (1) free Bonus Option.

The Bonus Options will have an exercise price $0.35 each, expiring on 15 October 2021 and, if exercised, each will result in the allotment and issue of one (1) fully paid ordinary share in Lake. Lake will not seek listing of the Bonus Options on ASX.

Keep reading... Show less

Lake Resources NL Argentina based Director Strengthens Board

Sydney, Australia (ABN Newswire) – Clean lithium developer Lake Resources NL (ASX:LKE) (FRA:LK1) (OTCMKTS:LLKKF) has strengthened its Board, announcing today the appointment of experienced energy/natural resources lawyer, Sra. Amalia Saenz as a Non-Executive Director.

Based in Buenos Aires, Sra. Amalia’s appointment will assist Lake and its local team in Argentina in engaging with local stakeholders and preparing for the development of clean lithium production in Argentina.

Sra. Saenz is a partner at the law firm, Zang, Bergel & Viaes in Buenos Aires, where she leads the firm’s energy and natural resources practice.

Keep reading... Show less

Classic Minerals Limited Quarterly Activities Report

Perth, Australia (ABN Newswire) – Classic Minerals Limited (ASX:CLZ) has made significant progress at Kat Gap during the quarter as it strives to become a gold producer.

Highlights of the quarter include:

– Assay results returned for infill RC drilling testing the gap between oxide and deeper fresh rock high-grade gold mineralisation at Kat Gap.

Keep reading... Show less

Australia Mining Update: H1 2021 in Review

Click here to read the previous Australia mining update.

After an uncertain 2020 for the Australian mining industry, the resource market showed signs of a sharp recovery in the first six months of the new year.

Keep reading... Show less

In exceptional market conditions, Rio Tinto achieves record financial results and declares total interim dividend of 561 US cents per share, 75% of underlying earnings

Rio Tinto Chief Executive Jakob Stausholm said “Government stimulus in response to ongoing COVID-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices. We focused on safely running our world-class assets and supplying products to our customers. This enabled us, despite operational challenges, to deliver record financial results with free cash flow of $10.2 billion and underlying earnings of $12.2 billion, after taxes and government royalties of $7.3 billion. We are further strengthening the portfolio with our commitment to fund the high-quality Jadar lithium project, which signals our large-scale entry into the fast-growing battery materials market. We will pay an interim dividend of 561 US cents per share, representing 75% of underlying earnings.

“We are making progress on our four priorities, identifying opportunities for operational improvement, advancing our ESG agenda, taking important investment decisions and stepping up our external engagement. We are making real and lasting changes to the way we engage, interact and operate and are committed to ensuring that we have strong and positive relationships wherever we do business. We have identified what we need to do to make Rio Tinto a better company for the long term, with the right teams in place to unleash our full potential.”

Keep reading... Show less

Lake Resources NL Bonus Issue to Shareholders

Sydney, Australia (ABN Newswire) – Clean lithium developer Lake Resources NL (ASX:LKE) (FRA:LK1) (OTCMKTS:LLKKF), in recognition of the support received from its shareholders, wishes to advise that it intends to undertake a bonus issue of options (Bonus Options) to all shareholders with an address in Australia or New Zealand (Eligible Shareholders) at 5:00 pm (Sydney time) on the Record Date (set out in the indicative timetable set out below*).

As the Bonus Options will be issued for nil consideration, Lake is raising no capital from their issue. For every ten (10) shares held at 5:00 pm (Sydney time) on the Record Date, Eligible Shareholders will be issued with one (1) free Bonus Option.

The Bonus Options will have an exercise price $0.35 each, expiring on 15 October 2021 and, if exercised, each will result in the allotment and issue of one (1) fully paid ordinary share in Lake. Lake will not seek listing of the Bonus Options on ASX.

Keep reading... Show less

Lake Resources NL Argentina based Director Strengthens Board

Sydney, Australia (ABN Newswire) – Clean lithium developer Lake Resources NL (ASX:LKE) (FRA:LK1) (OTCMKTS:LLKKF) has strengthened its Board, announcing today the appointment of experienced energy/natural resources lawyer, Sra. Amalia Saenz as a Non-Executive Director.

Based in Buenos Aires, Sra. Amalia’s appointment will assist Lake and its local team in Argentina in engaging with local stakeholders and preparing for the development of clean lithium production in Argentina.

Sra. Saenz is a partner at the law firm, Zang, Bergel & Viaes in Buenos Aires, where she leads the firm’s energy and natural resources practice.

Keep reading... Show less

Classic Minerals Limited Quarterly Activities Report

Perth, Australia (ABN Newswire) – Classic Minerals Limited (ASX:CLZ) has made significant progress at Kat Gap during the quarter as it strives to become a gold producer.

Highlights of the quarter include:

– Assay results returned for infill RC drilling testing the gap between oxide and deeper fresh rock high-grade gold mineralisation at Kat Gap.

Keep reading... Show less

Rio Tinto commits funding for Jadar lithium project

Rio Tinto has committed $2.4 billion to the Jadar lithium-borates project in Serbia, one of the world’s largest greenfield lithium projects. The project remains subject to receiving all relevant approvals, permits and licences and ongoing engagement with local communities, the Government of Serbia and civil society.

The Jadar project would scale up Rio Tinto’s exposure to battery materials, and demonstrate the company’s commitment to investing capital in a disciplined manner to further strengthen its portfolio for the global energy transition.

Keep reading... Show less

Lake Resources NL Appoints New CFO

Sydney, Australia (ABN Newswire) – Clean lithium developer Lake Resources NL (ASX:LKE) (FRA:LK1) (OTCMKTS:LLKKF) has appointed Peter Neilsen as Chief Financial Officer (CFO). The Company is ramping up its international project funding and development activities.

A key focus of the new CFO will be to guide a panel of international project financiers to successfully secure funding for Lake’s lithium production.

His other key role will be to develop and assist Lake’s team in Argentina to organise development activities and lithium production. He will also serve as joint Company Secretary.

Keep reading... Show less

Top News

Related News