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Here are 4 companies that we think are the top ASX resources stocks for October!
The 4 top ASX resources stocks for October!
1. Boss Energy (ASX:BOE)
Uranium is the hottest commodity in 2023, with spot prices jumping over 35% in the first 9 months of the calendar year. Uranium is a non-renewable resource with low carbon emissions, making it an attractive alternative to traditional fossil fuels and energy resources. But it has been impeded by low pricing ever since the GFC. Finally, things are turning around.
Boss Energy has had the South Australian Honeymoon Uranium Project since 2015. The uranium deposit there, which has a JORC Resource of 71.6Mlb at an average grade of 620ppm, has lied dormant for a decade since the previous owners mothballed it due to low prices.
Boss has gradually worked towards bringing it back into production completing feasibility studies, raising capital and undertaking infrastructure construction works at the project. Production will begin by the end of CY23. It is anticipated that the mine can last for 11 years, produce 21.81Mlb, with an IRR of 47.1% and a pre-tax NPV of A$412m (using a US$60/lb spot price and an 8% discount rate). It anticipates low capital costs of just US$80m and US$580m in free cash flow over the life of the project.
If you’re not interested in a company like Boss Energy with a project in Australia, you could invest in one of several companies with projects in Namibia – a country that has given investors plenty of jitters this year.
2. BHP (ASX:BHP)
OK, we confess this is blatantly obvious. And arguably risky given it recorded its lowest annual profit in 3 years, leading to significant dividend cuts. But we are still backing this one in because of its diverse range of commodities, making it a safer bet than Fortescue that is essentially a one-trick iron ore pony. In our view, the fears of widespread economic Armageddon are overblown – even if the economy is in a new era of Japan-like stagnation, it wouldn’t be as bad as investors fear. And we think there is potential for other developing countries like India to add to the demand for BHP’s products.
Keep in mind consensus estimates expect revenue and earnings to be flat and the company is trading at just 11.5x P/E.
3. Bellevue Gold (ASX:BGL)
Another company here that’s kickstarting production on its project before this calendar year is out. Another company with short-term price weakness that may offer a chance to buy in at a discounted price.
This stock’s namesake gold mine in WA is fully funded, has a 10 year mine life and a Total Mineral Resources of 9.8Mt at 9.9 g/t for 3.1Moz of gold. As we’ve written about elsewhere, we think it trading below its fair value and is also below many of its peers. And most importantly, there is past precedent for companies to do well if their project is truly a good one – see Gold Road (ASX:GOR) as an example.
4. Liontown Resources (ASX:LTR)
We’re including this one because it seems inevitable that it will be taken offer but there is not a firm deal just yet.
Liontown owns the Kathleen Valley Lithium Project in Western Australia. It has a current Mineral Resource Estimate of 156Mt at 1.4% lithium. Over 80% of this is Measured or Indicated. The project, which Liontown made the Final Investment Decision on last year, is one of the most significant new, long-life lithium projects being constructed anywhere in the world.
It received a $3 per share takeover bid from Albemarle (worth over $6bn) that Albemarle indicated is its best and final offer. The board of Liontown has granted Albemarle a period to conduct exclusive due diligence to enable it to put forward a binding proposal.
There is the risk that the bid might not go ahead – something that has happened with stocks such as ReadyTech (ASX:RDY) and Infomedia (ASX:IFM) in the last year. However, we are confident that the time for a deal has well and truly come.
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