The S&P/ASX 200 opened 0.2 per cent lower on Thursday, as tech shares and financials sell, while materials and energy shares gained ground following an increase in the price of oil and iron ore overnight.
Tech shares slipped 2 per cent and financials fell 0.9 per cent, while energy led with a 1.7 per cent advance and materials edged 1.1 per cent higher.
Healius shares fell 4.4 per cent, the biggest decline among blu chips, while Janus Henderson shared fell 3.3 per cent after announcing a new chief executive.
BHP and Rio Tinto both gained more than 1 per cent while NAB traded 0.8 per cent lower despite unveiling a new $2.5 billion buyback program.
Hedge fund research house J Capital published a "long" idea on Firefinch, an ASX-listed lithium and gold producer with a market cap shy of $1 billion. According to J Cap, its lithium asset alone is worth $1.4 billion, and the overall company $1.7 billion up to $2.3 billion.
Goulamina is the fully funded Malian lithium deposit which Firefinch intends to spin-out as a new company, Leo Lithium. J Cap principal Anne Stevenson-Yang speculates this could be the catalyst for the market to take a second look at Firefinch, which has been discounted because of the unrest in Mali. Under the terms of the transaction, Firefinch investors will receive a pro rata interest in Leo Lithium.
The present market-implied value of Goulamina is only $715 million. This is despite partner Ganfeng already agreeing to receive all of its offtake. It is "incredibly cheap", according to J Cap, and comparable projects such as those owned by Liontown and AVZ Minerals are valued at four to five times more than the implied market value of Goulamina.
Its gold asset, Morila, is operational and in a former life was known as "Morila the Gorilla" when owned by Barrick Gold. It is targeting producing 120,000 ounces this year and up to 200,000 ounces in 2024.
A geological analysis commissioned by J Cap found that assuming production of only 100,000 ounces annually, it is worth $275 million, but should it hit 156,000 ounces that would warrant a valuation of $430 million.
Further, one geologist told J Cap, remarking on sovereign risk: "Coups happen every Tuesday in Mali." J Cap also asserted that having a Chinese project partner was advantageous in Mali, where China is the biggest source of foreign investment.
