Junior resources market shows signs of life as China exports...

Junior resources market shows signs of life as China exports rise

BY:ROBIN BROMBY From: The Australian
October 15, 2012 12:00AM

"WE just might see the metals bounce back this week, possibly confirming there's a recovery of sorts under way.

China trade figures out yesterday showed that country's exports rose last month and will provide a little relief for China-watcher nerves. Money is still available for capital raisings. The speculative urge seems to be alive and well with local punters. Who knows, we might just muddle through this mess.

But that clearly was not the mood at the London Metal Exchange on Friday night, where the metals took a fair beating.

Nickel was off 3.7 per cent, falling back to a shaky $US17,075 a tonne. Lead and tin took hefty blows, too. And zinc -- now it's nine consecutive days of losses on the LME, back down under the $US2000/tonne mark and LME stockpiles back over 1 million tonnes.

Just hours before the China figures came out, Bloomberg reported a survey showing copper traders at their most bearish for four months amid expectations that demand for industrial metals would continue to weaken. They were also spooked by the forecast from the Lisbon-based International Copper Study Group of a copper surplus next year of 458,000 tonnes.

However, that there's still life in the junior resources market was shown by the listing on Thursday of Boadicea Resources (BOA), which has ground just 4.2km from the hot Nova copper-nickel discovery by Sirius Resources (SIR).

BOA's 20c shares hit 64c on the first day and even by Friday night were doing pretty well by ending at 54c. It takes you back, that sort of thing, doesn't it? Especially considering that BOA struggled for months to get enough shareholders to float.

We alerted you to BOA in February when Clarke Dudley was raising seed money. We had followed Dudley back in the days when he was trying to peg great tracts of Sweden for the former Alcaston Mining until he was the victim of a boardroom coup.

Pure Speculation saw Boadicea as his comeback. He owns 45.43 per cent of BOA, so he should be feeling pretty clever at the moment.

Tony Locantro of Locantro Capital noted the BOA action, following as it has the steep rises for several other stocks in recent months, including Peel Exploration (PEX) for its Mallee Bull discovery and Sabre Resources (SBR) for its Namibia copper burst.

"Who would have thought that we would be witnessing the current activity when July 2012 would rate as one of the worst months I have seen in the junior resources sector," he says.

"Quality juniors were being sold down well below their cash backing and there was the real fear that suddenly a new pricing mechanism (a really crappy one) was to be applied to exploration companies."

For the first time this year, the chart of 135 juniors followed by Warwick Grigor at Canaccord Genuity has flipped over into bull mode, with 36.3 per cent of the stocks in up-trends and 35.7 per cent down-trends, with the rest neutral.

Grigor is encouraged but cautious. "We need to see the number of stocks in up-trends exceed the 50-55 per cent level before we can start to get cocky," he told clients.

Money is there for what the deep-pocketed ones see as the right projects. Syrah Resources (SYR) got away a $16 million placement for its Balama graphite-vanadium project in Mozambique.

Copper uncertainties notwithstanding, Mitsubishi is talking about putting $19.5m into the Joshua project in Chile operated by Helix Resources (HLX)"

Will run even more. Great news.