Australian Gold and Copper (ASX:AGC) is one of the more standout ASX stocks currently a clear beneficiary of the recent copper rally.
Over the last week, shares in AGC have climbed 170% – rising from 10c on May 9th to 33cps on 20 May in lunchtime trades.
The underpinning macro driving sentiment is clear – record high gold prices and record high copper prices.
In fact, the price of copper is up just short of +40% YoY and the price hit over US$5.00/pound overnight, which is firmly over US$10,000/tn – a key psychological threshold for copper supporting bull cases everywhere.
The ultimate spark that triggered the rally was Chinese smelter output reductions earlier this year as margins suffered on weaker demand.
If you want proof the stock has become a new copper darling, just look to ASX compliance. Following last week’s rapid surge in shares, the bourse operator hit the company with a please explain.
The company responded to the operator’s questions today, releasing its statement that everything is kosher, as AGC shares climbed another 12% to 33cps in lunchtime trade.
The company also recently announced hitting silver in recent drill-results. The company also flagged gold hits on Thursday, which it said on Monday is the reason why suddenly everybody is buying shares in AGC.
But whether the drill results are really any good – while subjective to an extent – is perhaps a less important question than “how long can the stock benefit from commodity sentiment?”
On Thursday, the company’s headline result was a 4m long intersection grading at 2.3g/t gold and only 0.2% copper.
That was also pulled from 123 metres depth – not really the kind of grades that support an operation to dig that deep in the first place.
With copper also in low concentrations, it isn’t clear whether the market sees something solid in AGC’s overall operations, or if the stock is just benefitting from a generous risk-on attitude towards copper miners in general.
AGC last traded at 33cps.