Cobalt, Lithium, Vanadium Companies Outshined Competition In 2017

The mining sector performed well in 2017, with the industry's aggregate market capitalization rising to US$1.4 trillion and a long-awaited improvement in investor confidence. An analysis of 15 companies with the largest share-price appreciation in the calendar year to December 29, 2017 reflected the growing relevance of battery commodities, such as cobalt, lithium, and vanadium.

Metals and mining firms with greatest stock appreciation in 2017

Katanga Mining Ltd., the industry's top performer with a more than 14-fold rise in its share price, is 86.33% owned by Glencore PLC and is heavily active in cobalt extraction space. Per S&P Global Market Intelligence, 27% of 2016 mined cobalt production was controlled by Glencore and its subsidiary, primarily in the Democratic Republic of the Congo. Katanga Mining's 75%-owned Kamoto, which has been temporarily closed since 2015 and is expected to re-open later this year, will provide a further boost to Glencore's cobalt share.

Despite the company's positive equity performance, Katanga Mining is facing legal investigations over allegations that it issued misleading business information to investors.

Altura Mining Ltd., which is about to become a significant producer of hard rock lithium in Australia, saw its share price rise over three-fold during 2017. The company raised A$26 million for an expansion study on its preproduction stage Pilgangoora project in Western Australia in early October, and later that month reported favorable revisions to its mineral resources and ore reserves; some 78% of the mineral resources were converted to ore reserves, and the revised estimate is now 34.2 million tonnes at 1.04% lithium oxide for 357,000 contained tonnes. Pilgangoora is slated for commissioning in the current quarter.

Australia-based Clean TeQ Holdings Ltd. was among the sector's top performers with a 214% increase in share price during 2017. The company recently began trading on the Toronto Stock Exchange, while it remains listed on the OTCQX and Australian Securities Exchange. Clean TeQ's primary focus has been the development of the Clean TeQ Sunrise nickel-cobalt-scandium project in New South Wales, where it plans to use its chemical expertise to produce hydrated cobalt sulfate. A technical report was released in November to support the TSX listing application — total capital costs were estimated to be US$784 million, and the project is currently projected to produce 3,200 t/y of cobalt.

Lithium Americas Corp. nearly tripled its share price for 2017. The company is developing the preproduction Cauchari-Olaroz lithium brine project in Argentina with its joint venture partner, Sociedad Quimica y Minera de Chile SA, as well as its 100%-owned late-stage Lithium Nevada. In July, Lithium Americas closed a US$113 million financing for Cauchari-Olaroz, which was primarily intended to fund a portion of the company's share of construction costs. The company announced a share consolidation in November prior to applying for a New York Stock Exchange listing, which it expects to receive later this month.

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Other companies with significant share price appreciation in 2017 include Largo Resources Ltd., a vanadium-focused company that saw a rise of 190%, and China Molybdenum Co. Ltd., whose share price increased 164%. China Molybdenum purchased a 56% stake in the Tenke Fungurume copper-cobalt mine in 2016, which was also the second-largest cobalt producer that year.

Largo Resources' Maracas Menchen mine in Brazil received an updated mine plan in October, which proposed expanding the production rate to 11,520 t/y vanadium pentoxide in 2019 and 13,200 t/y in 2020.

Metals and mining firms with greatest stock depreciation in 2017

While cobalt, lithium, and vanadium-focused companies dominated the list of top share-price performers, other mining firms suffered significant falls in their share price during 2017. Gold producers Eldorado Gold Corp., Tahoe Resources Inc., Acacia Mining PLC, and Torex Gold Resources Inc. declined by 55%, 49%, 42%, and 39%, respectively. The share price of TMAC Resources Inc. declined 33%, despite achieving commercial gold production at the Doris component of its Hope Bay complex in May and the yellow metal's spot price having risen 13% during 2017.

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Jan 22, 2018
Nov 14, 2017