Barry FitzGerald: Antimony stocks showing real value after market carnage

Antimony stocks weren’t saved from the recent market carnage. But prices are at all time highs and advanced players are now looking cheap.

Antimony stocks were not spared from recent market carnage. Now Garimpeiro wonders if they're looking cheap. Pic: Supplied/Stockhead

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

Garimpeiro thought that critical metals might well have been spared from the worst of the stock market’s wild ride in response to the escalating trade war between the US and China.

After all, critical metals are meant to be …err…critical. But that doesn’t seem to be the case in a market where daily wild swings have become the norm in response to the latest dispatch from the trade war front.

The ASX critical metals stocks have been bashed up just as much as the rest of the market, if not more so in some categories. Down one day, up strongly the next, only to fall again the next day, and so it goes.

The irony for the critical metals stocks is that the worse things get between the two super powers, the more likely it is that China will increasingly weaponise its production/processing prowess across a broad sweep of metals deemed critical to the modern world.

It already has form in that regard. After having first imposed export controls in September last year, Beijing declared in December that antimony exports to the US were verboten. So too were gallium and germanium.

Antimony is Garimpeiro’s interest today.

Quite pointedly, Beijing’s December proclamation said it had national security concerns around antimony because of its civilian uses (solar panels, fire-retardants, semiconductors) and its military applications (ammunition, plating for tanks, night goggles, and so on).

Antimony prices have been on an absolute tear as result. What was being exchanged for US$12,000/t just 16 months ago now commands $US60,000/t. As Beijing well knows, the ban on exports to the US and its broader export controls could not have come at a worse time for the western world.

The state of play

Stockpiles of antimony have been whittled away because of ongoing wars. Military stores have to be replenished. And then there is the commitment by Europe and the US to spend massively on increasing their military capability to deal with the Russia/China threat.

There is also the increasing drawdown on antimony stockpiles coming from the solar industry which uses the stuff to make top end glass panels.

China’s leadership in solar panels and the huge growth of its industry means it wants to keep its antimony – about 50% of global supply and much higher levels of control across processing – for itself.

In short, antimony has become a metal that everyone wants and needs. It is why the price is at record levels and why the price will not be retreating anytime soon.

But as suggested earlier, the current boom time price did not protect ASX-listed antimony players during the week from the worst of the stock market’s gyrations in response to the latest tariff missive from Washington or Beijing.

Is the sell-off overdone?

Given the critical nature of antimony in a worsening geopolitical backdrop, Garimpeiro reckons there is every chance the sell-off in antimony stocks is overdone. The Western world needs more of the stuff,  yesterday.

Why, it could be argued that antimony is actually more of a haven status metal than gold at the moment. The Western world could get by if China stopped access to its gold production. It’s a different story with antimony.

Because both antimony and gold are found together in nature, it’s kind of neat that investing in an antimony stock at a time of record prices is also an investment in a gold stock at a time of record prices.

Metal ratios differ from deposit to deposit. Depending of the revenue spilt between the two metals being produced, a mine could be an antimony-gold mine, or a gold-antimony mine.

The ASX antimony names are well known to Stockheaders and include Larvotto Resources (ASX:LRV), Trigg Minerals (ASX:TMG), Nagambie Resources (ASX:NAG), Southern Cross Gold (ASX:SX2), among others. All but Southern Cross are trading at levels well below the level seen 10 days ago when markets were trading calmly.

So, Garimpeiro wonders if it could be worth revisiting the antimony stocks on the basis that they are better value than they were 10 days ago and things critical and geopolitical have swung massively in their favour in the same period.

Because Nagambie is the smallest of the bunch, Garimpeiro passes on that Breakaway Research has just put a 15c price target on the stock. It closed on Thursday at all of 1.7c a share.

The views, information, or opinions expressed in  this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

At Stockhead, we tell it like it is. While Trigg Minerals is a Stockhead advertiser, it did not sponsor this article.

Originally published as Barry FitzGerald: Antimony stocks showing real value after market carnage