It was a rough month for equities, but the ASX microcaps January winners list still made for positive viewing.
For context, a quick rewind to 2021 is in order (what a year).
In just 12 months, there were more than 180 IPOs on the ASX (quick mafs: that’s about one every two days).
All while the pandemic raged and Australians navigated a vaccine rollout that was… non-linear at best.
In the second half of the year, inflation was a thing (for the first time in a decade-plus).
But markets digested it.
That was followed by a strong Santa rally, as local stocks ramped into Christmas with their second best month of the year in December.
The end result? After somehow climbing in 2020 despite the most savage market selloff of all time, the ASX closed out 2021 with a punchy 13% gain.
Where’s the Panadol?
If December was a party, January represented a wolfpack-in-Vegas level hangover.
Things got icy in a hurry, and analysts attributed most of that wind chill to a realisation that the US Fed isn’t actually messing around when it comes to inflation, and may raise rates faster than expected.
Here’s one you may have heard before; when rates expectations rise, high-growth tech stocks with big earnings projections baked into their valuation multiples get re-rated (down).
Well, it happened.
And despite the good vibes heading into year-end, local tech sectors such as BNPL were already under pressure.
Is there light at the end of the tunnel? The big BNPL players — Block Inc (née Afterpay) and Zip Co climbed off the mat with +7% intraday gains to end the month yesterday.
But once the dust settled on January, it wasn’t a pretty sight.
From January 4 to January 31, the S&P/ASX All Tech index got smashed with a fall of 17.1% — close enough to a bear market (+20%).
In better news, the ASX is also heavily represented by commodities stocks.
As global logistics bottlenecks and supply-side constraints remained prevalent, investors found solace to start the year amid what some believe will be a global commodities super-cycle.
And looking under the resources hood, an additional pattern emerged; ongoing demand for all things lithium, rare earths and base metals.
HERE’S THE TOP 50 SMALL CAPS FOR THE MONTH OF JANUARY 2022
Scroll or swipe to reveal table. Click headings to sort.
|CODE||COMPANY||PRICE||1 MONTH % RETURN||MARKET CAP|
|ODE||Odessa Minerals Ltd||0.015||200.0%||$9,131,569|
|ESS||Essential Metals Ltd||0.5||177.8%||$120,330,673|
|ARR||American Rare Earths||0.38||130.3%||$157,033,553|
|SAN||Sagalio Energy Ltd||0.029||123.1%||$2,660,582|
|ZAG||Zuleika Gold Ltd||0.037||117.6%||$14,871,361|
|QXR||Qx Resources Limited||0.04||90.5%||$26,456,131|
|XTC||Xantippe Res Ltd||0.0095||90.0%||$47,133,799|
|IEC||Intra Energy Corp||0.024||84.6%||$10,029,418|
|AUQ||Alara Resources Ltd||0.045||80.0%||$33,155,174|
|RNU||Renascor Res Ltd||0.215||79.2%||$397,712,907|
|CMD||Cassius Mining Ltd||0.023||76.9%||$7,428,833|
|ASO||Aston Minerals Ltd||0.17||73.5%||$171,755,537|
|MRR||Minrex Resources Ltd||0.061||69.4%||$39,444,046|
|DCX||Discovex Res Ltd||0.01||66.7%||$25,686,641|
|ESR||Estrella Res Ltd||0.036||63.6%||$38,842,443|
|CLA||Celsius Resource Ltd||0.031||63.2%||$31,619,342|
|LPI||Lithium Pwr Int Ltd||0.67||61.4%||$219,725,004|
|AZL||Arizona Lithium Ltd||0.145||61.1%||$269,381,481|
|TNR||Torian Resources Ltd||0.034||54.5%||$35,493,620|
|88E||88 Energy Ltd||0.0415||53.7%||$592,443,048|
|WCN||White Cliff Min Ltd||0.0245||53.1%||$13,050,321|
|BIR||BIR Financial Ltd||0.035||52.2%||$3,144,521|
|BNR||Bulletin Res Ltd||0.105||52.2%||$27,755,758|
|HIO||Hawsons Iron Ltd||0.205||51.9%||$153,736,384|
|SHE||Stonehorse Energy Lt||0.021||50.0%||$15,057,572|
|ZNC||Zenith Minerals Ltd||0.335||48.9%||$123,769,496|
ASX microcaps — January winners
Of the 50 best performing stocks at the small/micro/nanocap end of the market, 45 were resources and energy companies.
Leading the way on a monthly basis was lithium play Critical Resources (ASX:CRR), which caught the market’s attention on January 5 after completing its 100% acquisition of the Mavis Lake lithium project in Ontario, Canada.
That was followed by the discovery of a unique kind of copper mineralisation at what CRR hopes will be a large scale, multi-element, base metals system at its Halls Peak project near Armadale, NSW.
Shares in the company jumped from ~4c to +14c before cooling off into the end of the month.
With lithium featuring heavily at the top end of the January winner’s list, WA-based lithium player Essential Metals (ASX:ESS) was another top performer.
ESS actually has lithium in the ground at its ‘Pioneer Dome’ project (about 11.2Mt of it so far) and is keeping the market updated regarding ongoing drilling results, mining lease applications and capital-cost projections for a processing plant.
Shares in the company got another boost last Friday (+22%) with the release of its quarterly trading update summarising its busy activities schedule.
Had enough lithium yet? Too bad — Morella Corporation (ASX:1MC) ripped higher in January on light news flow (including a speeding ticket from the ASX on January 20).
1MC shares have eased back from their monthly highs, but investors are still banking on more good news from the company’ Fish Lake Valley lithium project in the US state of Nevada — just a one-charge EV ride from Tesla’s Gigafactory.
Another US-adjacent resources player — American Rare Earths (ASX:ARR) — also had a strong month, more than doubling with a gain of ~130%.
ARR, which operates the La Paz critical minerals project in Arizona, posted strong gains through the middle of the month, following news of a US Senate ban on defence-sector contractors buying Chinese produced rare earths by 2026
Is that… 3D printing?
3D printing technology has always held promise, but after a brief hype-phase local investors have demanded proof of scalability from the ASX’s cohort of 3D players.
Largely, that’s meant voting with their feet and taking their investment dollars elsewhere.
But Melbourne-based additive manufacturing company Titomic (ASX:TTT) had a good month, bouncing off recent lows with a gain of 60% per cent.
The company reported its 4C filing on January 31, with operating cash outflows of $3.03m on cash receipts of $674,000. It finished the quarter with $13.786m in the bank.
While TTT gained ground in February, at a close of 28c the stock is still well off its 2019 highs above $2.50, when the outlook for additive manufacturing was more optimistic.
Joining Titomic on the winner’s list was sub-$10m market cap 3D printing company 333D Ltd (ASX:T3D), which ticked higher in the month to 0.35c — good enough for a January gain of 75%.
Pinky and the brain(chip)
Speaking of speculative tech, we’d be remiss if we didn’t mention AI chip technology company Brainchip (ASX:BRN), which was the only non-resources stock to make the top 10 with a monthly gain of more than 100%.
At a close of $1.42, Brainchip is off its January highs above $2.30, following a face-melting rally that took the largely pre-revenue chip developer to a market cap north of $3 billion.
Coinciding with BRN’s January zenith, Stockhead asked what we thought was a fairly-phrased question; Brainchip… what’s the go there?
Shortly after that, the stock got caught in the clutches of a month-end tech meltdown.
But a market cap of $2.374bn is still nothing to sneeze at. And $1.42 marks a mouth-watering premium to the 3c BRN traded at pre-pandemic.
Precious metals (more specifically, gold).
Rounding things out, January also saw the emergence of a couple of junior goldies among the monthly winners.
While the macro forces driving the gold prices will always be debated ad nauseum, small cap investors can look for other investment catalyst — such as a $3m tick of approval from mining luminary Mark Creasy.
That was enough to prompt a surge for Zuleika Gold (ASX:ZAG), which ripped higher after getting direct funding from Creasy to proceed with drilling programs across multiple exploration targets at ZAG’s gold-rich Kalgoorlie projects.
Also near the top of the winner’s list was Pacgold (ASX:PGO), which has climbed consistently since a 53% surge on January 12.
On that day, PGO that it might be sitting on top of a large-scale, high-grade gold system at its Alice River project in Queensland following a string of positive drill results.
Investors are now keenly awaiting the next round of results, following a 111% gain in Pacgold’s share price for the month of January.
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