The resources sector is currently experiencing a boom that is unparalleled for several decades, encompassing almost every segment of the resources industry. Commodity and share prices have hit record levels reinvigorating corporate activity in the process. More than ever, investors need the right tools to be able to evaluate investment opportunities in the sector. This is where Fat Prophets Mining & Resources comes in.

Pricing Volatility

Resource shares typically exhibit a higher degree of market and price volatility than their industrial counterparts. This is as a result of the multitude of issues that can potentially influence the day-to-day operation of a resource company.

These key issues can be both micro and macro in nature. Examples of micro influences include exploration results, personnel changes, project acquisitions and mine/field performance. Macro influences are more global in nature and include commodity price fluctuations and variations in the level of global economic activity. Both micro and macro factors can influence the day-to-day price volatility of any particular resource company.

This volatility, whilst presenting challenges for the investor, also represents an opportunity to achieve superior investment returns by means of careful and considered stock selection. Fat Prophets Mining & Resources provides investors with a weekly newsletter publication that aims to simplify the decision-making process.

Performance Drivers

Operational Fundamentals - the manner in which a mining or energy company manages its production operations is a major determinant of its market rating. Profitability and efficient asset operation are key issues, as are operating lives of mines and energy fields in determining company valuations.

Exploration - one of the biggest influences on the value of resource companies, particularly at the smaller end of the spectrum, is the level of exploration success. More than any other factor, the impact of exploration success has the potential to transform a junior company from a market minnow, virtually overnight. Investor interest in exploration success is what drives the smaller end of the resources sector, a traditional component of the Australian sharemarket.

Commodity Pricing - the relative strength in the level of underlying commodity prices plays a major role in determining the volatility of resource companies. Commodities such as oil and gold are particularly vulnerable to immediate price spikes, driven by global issues.

Global Issues - the underlying health of the world economy plays a major role in the demand for commodities and hence influences the volatility of companies in the resource sector. Global issues such as terrorist attacks can also influence commodity prices in a more immediate way.

Commodity Data

The commodity data displayed represents the closing prices for all items (if available) on the cash or spot markets (unless stated otherwise):

Precious Metals
Gold (US$/oz) - London PM Fix
Silver (US$/oz) - London AM Fix
Platinum (US$/oz) - London PM Fix

Base Metals
Aluminium (US$/t) - LME
Copper (US$/t) - LME
Nickel (US$/t) - LME
Lead (US$/t) - LME
Tin (US$/t) - LME
Zinc (US$/t) - LME