Austex's Rob Murdoch Highlights Value Opportunity in ASX-listed Resource Stocks

Where the value lies in the ASX mining sector

In terms of where the money currently is in Australia's mining space, the 50 year sector veteran pointed to gold, which dominates with a 39 percent share of the ASX resource market, up 25 percent since 2018.

In descending order, iron ore, rare earths, fertilizers, kaolin, manganese and silica have also seen increases in market share over the last three years.

The majority of ASX-listed companies ― 66 percent ― have their flagship projects on home soil, with 41 percent located in Western Australia. Of the companies with premier projects outside of Australia, 14 percent are in the Americas, 11 percent are in Africa and 9 percent are elsewhere.

Another factor to consider before investing is which commodities are seeing price increases. Oil and gas, as well as gold, have seen their value grow significantly, with the latter up 56 percent since 2018.

“(Additionally), nickel has gone up 125 percent just in this year alone,” said Murdoch, who went on to note that thermal coal has seen a 98 percent price increase and will play an integral role in Australia's future.

“Thermal coal is going to keep this state going for a long, long time. It's the most critical mineral in the state ... because it makes money for the state,” he added.

Murdoch also pointed to a cyclical resurgence in cobalt, which has found renewed demand in the electric vehicle sector. “If we look at the commodities whose prices have gone up the most year-to-date, it's cobalt," he commented. "There's been a lot of interest in cobalt; it's come back into its own. Of course, it had a bit of a boom and then had a bit of a crash, and now it's come back again.”

Playing the long game in the Australian resource space

As his presentation came to an end, the principal analyst at Austex encouraged investors to take long positions when it comes to resource value.

“The best way to make money out of the market is really to get in early on a drilling intersection, ride right up and don't be scared to go in deeper if they make a good announcement of a new discovery. Because if it is really a good discovery, it will go up higher again," he noted.

Murdoch finished his keynote by praising the market optimism attendees displayed during a quick show of hands, noting that demand will certainly be there to drive the sector higher.

According to Murdoch, the "only negative" that could prevent this market growth is rising inflation.