Gold, iron ore companies rise up as winners in WA

Image: Fortescue Metals Group

Fortescue Metals Group, Mount Gibson Iron and Silver Lake Resources are the three companies to experience the largest market capitalisation growth in the 2019 financial year, according to the Deloitte Western Australian Index.

Gold miner Silver Lake’s market capitalisation increased by 240 per cent to $1.03 billion, while iron ore producers Mount Gibson’s jumped by 141 per cent to $1.15 billion and Fortescue 103 per cent to $27.76 billion.

The results, which were presented at the index at the Diggers & Dealers Mining Forum in Kalgoorlie today, reflect significant price increases of Western Australia’s most economically important commodities, iron ore and gold.

“Global uncertainty driven by events such as Brexit and US–China trade wars put renewed focus on the gold sector with prices soaring over $2000 an ounce by year’s end, a record, and with Western Australia accounting for around 70 per cent of the nation’s production, it’s the natural home of Australian gold,” Deloitte Western Australia assurance and advisory partner Dave Andrews said.

“Meanwhile, the catastrophic dam failure in Brazil along with falling production in China has seen the iron ore sector riding a bull market with an 82 per cent leap in the benchmark spot price this year.”

Overall, Western Australian-based listed companies are valued at $190.9 billion, with the Deloitte WA Index remaining above $190 billion for only the second time since May 2011.

The index also comes off the back of two years of “spectacular growth” of 13.5 per cent and 26.8 per cent in 2017 and 2018 respectively.

“But not everyone can be a winner,” Andrews said. “The global uncertainty over trade and tariff wars has resulted in more than half the commodities surveyed in the Deloitte WA Index recording a price decline over the past 12 months.

“Additionally, investors remain cautious and continue to hold companies to account, with missed production targets meeting some savage responses from the market.”

The three largest Western Australian Index top 100 movers for the same period are Bellevue Gold (market capitalisation up 417 per cent to $351 million), Liontown Resources (up 396 per cent to $153 million) and Walkabout Resources (up 234 per cent to $135 million).

“Still, it’s certainly not doom and gloom down under thanks to favourable US dollar currency adjustments and the Reserve Bank of Australia’s own commodity price index showing we remain on an upward trend,” Andrews concluded.

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