abc news boom time for resource stocks

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    Last Update: Wednesday, October 15, 2003. 2:35pm (AEST)

    Boom time for resource stocks

    EMMA ALBERICI: Mining exploration expenditure, which halved between 1997 and 2002, is on the way up again.

    Surging commodity prices and the signing of lucrative new contracts have made resource stocks flavour of the month.

    NEAL WOOLRICH: Oxiana Limited, which mines copper and gold in South Australia, is one of many smaller miners that's benefited from the recent surge in metals prices.

    OWEN HEGARTY, MANAGING DIRECTOR, OXIANA LTD: It's a very exciting time.

    Not only do we have the external market working for us, if you like, in terms of commodity prices, but inside the company, we're growing the business quite rapidly.

    NEAL WOOLRICH: Oxiana's share price has risen almost 50 per cent in four months -- from 57 cents in June to 84 cents today.

    OWEN HEGARTY: We also believed that being in copper and gold -- our two favoured commodities -- that they were at somewhat of a low ebb in the market and we always expected that they would rise.

    NEAL WOOLRICH: And they have.

    Copper is at a three-year high after a price increase of 21 per cent this year.

    Gold -- up 8 per cent for the year -- hit a seven-year high last month.

    But the star performer is nickel, up 48 per cent this year to a 13-year high.

    For the mining sector, the good news couldn't have come soon enough.

    ANNIE ARNOLD, MINING & EXPLORATION ASSOCIATION: We've been enduring an appalling period since 1997, where, in that period, exploration expenditures have been reduced by 50 per cent.

    NEAL WOOLRICH: Investors with long memories will remember the Australian stock market's ill-fated Poseidon adventure.

    On the back of a nickel boom, the small miner's share price soared to $280 in 1970, before an equally spectacular collapse.

    So, will today's market darlings suffer the same fate?

    ANNIE ARNOLD: From what we can understand, this isn't based on just punters.

    We think there's reality to this.

    NEAL WOOLRICH: With the Stock Exchange's minerals index up 32 per cent over the past 12 months, investors will be hoping that forecast is right.

    Neal Woolrich, ABC News.
 
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