The ASX recorded modest gains last week as reporting season continued. The S&P/ASX 200 (ASX: XJO) finished the week up 2%. Reporting season is laying bare the financial impact of the pandemic on revenues and profits. Although the economic downturn does not bode well for many ASX shares, some companies have been more resilient than expected while others have actually benefitted from pandemic-induced shifts in consumer behaviour.
Resilient results from National Australia Bank Ltd (ASX: NAB) pushed the big banks higher last week. The NAB share price gained 7.4%, while Australia and New Zealand Banking Group Limited (ASX: ANZ) rose 5.6% and Westpac Banking Corp (ASX: WBC) gained 7.6%. Commonwealth Bank of Australia (ASX: CBA) saw only a 0.3% share price rise after slashing its dividend and revealing an 11.3% decline in cash profits.
The gold price declined last week sending mining shares lower. The Northern Star Resources Ltd (ASX: NST) share price fell 10.38% over the week while the Resolute Mining Limited (ASX: RSG) share price fell 7.33%. Here, we take a look at five of the worst performing ASX shares over the last week.
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IVE Group Ltd (ASX: IGL)
The IVE Group share price dropped 24.34% last week to close the week at 58 cents. The share price dropped sharply on Tuesday when Coles Group Ltd (ASX: COL) announced it would cease distributing weekly catalogues to households. These catalogues are printed and distributed by IVE Group to approximately 7 million Australian households weekly via around 14,000 walkers nationally. IVE Group expects this will reduce its revenue by approximately $35 – $40 million per annum. The full impact of the reduction in revenue, including any potential goodwill impairment, will be revealed in full year results on 25 August 2020.
IVE Group says it moved quickly at the onset of the coronavirus pandemic to respond to revenue volatility. These initiatives place the company in a stronger position to mitigate the impacts of revenue declines. IVE Group says it remains committed to supporting the continued strength of the printed catalogue as an important component of an integrated communications mix.
Alacer Gold Corp (ASX: AQG)
The Alacer Gold share price fell 14.56% last week to finish the week at $8.98. As the name suggests, Alacer is a gold producer whose cornerstone asset, the Copler Gold Mine, is located in Turkey. The mine is currently processing ore through two producing plants with 2020 production guidance of 310 – 360Koz. Alacer Gold's primary listing is on the Toronto Stock Exchange, with CDIs (CHESS Depositary Interests) trading on the ASX.
Alacer Gold's proposed merger with SSR Mining Inc (NASDAQ: SSRM) was recently approved by the Supreme Court of Yukon. The merger of equals is expected to provide shareholders with a diversified portfolio of operating assets across four jurisdictions and enhanced trading liquidity across multiple global exchanges. Alacer is continuing targeted exploration work in other regions of Turkey with a number of highly prospective targets.
Pilbara Minerals Ltd (ASX: PLS)
The Pilbara Minerals share price dropped 13.41% last week to close the week at 36 cents. The share price had risen strongly the previous week, so last week's drop reversed those gains. The lithium price has remained at near record lows of late as demand remains subdued in China's lithium market. The metal is a key component of batteries used in electric vehicles, so longer term prices are tied to this market.
Pilbara Minerals has an optimistic outlook for the price of lithium over the longer term. Post-COVID-19 stimulus packages introduced by governments in a number of jurisdictions have focused on the electric vehicle and renewable energy sectors. The miner believes market signalling indicates lithium prices may be approaching the bottom, with some analysts forecasting a demand surge and price turnaround in 2021.
Ramelius Resources Limited (ASX: RMS)
The Ramelius Resources share price fell 12.67% last week to finish the week at $1.93. The Western Australian gold producer saw the share price dive as gold prices fell. Gold hit a high of nearly $2850 per ounce in the first week of August but has since pulled back to around $2700 per ounce. Ramelius produced a record 86,517 ounces of gold in the June quarter at an all-in sustaining cost (AISC) of $1,041 per ounce. This was above guidance of 65,000 – 70,000 ounces at an AISC of $1,000 – $1,100 per ounce.
Over FY20, Ramelius Resources produced 230,426 ounces of gold at an AISC of $1,164 per ounce. Production in FY21 is expected to set a new record of between 260,000 – 280,000 ounces at an AISC of $1,230 – $1,330 per ounce. Gold production in the September quarter is expected to be between 65,000 and 70,000 ounces at an AISC of $1,250 – $1,350 per ounce.
Ioneer Ltd (ASX: INR)
The Ioneer share price dropped 12.5% last week to close the week at 10 cents. Ioneer is an emerging lithium and boron producer. The company is currently advancing its 100% owned Rhyolite Ridge project in Nevada in the United States. The aim is for the project to be in production by mid 2021, with engineering works continuing and plans and permit applications submitted to relevant authorities.
A recent feasibility study showed compelling project economics, giving an after-tax net present value of US$1.265 billion. Total ore reserves at Rhyolite Ridge are estimated at 60.5 million metric tonnes over a 26-year mine life. Plans are for a large, long-life, low-cost operation with an all-in sustaining cash cost of US$2,510 per metric tonne. This would place the project at the bottom of the global lithium cost curve. Discussions are progressing with a range of strategic funding partners. Distribution and offtake agreements are in place which cover 100% of Ioneer's first year of production and 85% of years two and three.
