Bulls head for VFEX resource stocks

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VFEX chief executive Justin Bgoni

BY SHAME MAKOSHORI
BULLS will camp on the Victoria Falls Stock Exchange (VFEX)’s mining counters this year, as markets respond to robust demand in electric vehicles (EVs) and output from global automobile makers, a new study said Friday.

It had generally been said lithium mines would clinch bigger deals out of the EVs revolution and Zimbabwe is tipped to be among the biggest beneficiaries of the demand for the metal.

But researchers at Wealth Access Securities firmed up the positive sentiment by adding a few more Zimbabwean endowments whose values would buck the global trend as economies swing towards clean energy.

It tipped VFEX-listed Bindura Nickel Corporation (BNC) to rebound as appetite rises on the back of higher demand for minerals required for manufacturing EV batteries, including nickel and graphite.

The report projected global demand for lithium to rise 36 fold in the coming decade, with Zimbabwe among the heartthrobs of the push whose framework is being shaped now.

BNC chairman Muchadeyi Masunda

BNC presides over some of the region’s biggest nickel assets, with significant expansion scope at unexploited greenfield projects at Hunters Road.

The EVs revolution also presents opportunities for graphite mining, an industry that has been dying since the near collapse of Lynx Mine, in the past few years.

Wealth Access also sees unblinking bulls on VFEX listed Padenga, which presides over two key goldfields in the southern African country.

Jersey headquartered gold producer, Caledonia Mining Corporation also trades its stocks on VFEX.

“Gold prices have been on the rise given its safe haven status,” said Wealth Access’ report, which reviewed the first quarter of this year.

Caledonia chief executive Steve Curtis

“Global risks and geopolitical uncertainties should help in maintaining this bullish trend. There has been a trend recently by governments to push for clean energy and a push towards clean energy vehicles so as to achieve low carbon societies. It is estimated that the proportion of EVs and hybrids in global auto sales might be over 50% by 2030. We expect a drastic change in the automobile industry and materials sector. The place of internal combustion engines will be taken by the batteries and new-vehicle-motors. As such, certain mineral resources are going to be in high demand. A lithium-ion battery requires lithium, cobalt, nickel and graphite as significant materials. The demand for these resources is on a surprising uptrend as lithium requirement is likely to reach 36 times current demand by 2030. We also noted that nickel is going to form part of the cathode of choice in EVs. As such, mining groups such as BNC, are set to experience growth as the EVs story unfolds. On the other hand, Caledonia and Padenga Holdings are set to benefit from the gold price trend. To this end, investors should start taking positions on the Victoria Falls Stock Exchange (VFEX),” the report said.

“The 2021 deficit was caused by 17% growth in global nickel demand driven by the stainless-steel sector, which accounts for just over 70% of all nickel demand, and batteries. It is likely that demand for nickel for the production of stainless steel and non-stainless steel will hold up in 2022, which will keep the market largely balanced this year, leaving little room for currently depleted inventories to be restored. Our March 2022 equity research note for Bindura Nickel Corporation, highlighted our bullish view on BNC with a target price of US9,40 cents per share at least in the coming financial year. This view is based on both short-term technical stocks buying pressure and potential multiple uprating of growth in Zimbabwe’s nickel mining business,” Wealth Access said.

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