The long-suffering mining services sector could be set for a comeback, with S&P Global logging surging Australian exploration spending and drilling in the March quarter, with a focus on lithium and gold, and Perennial Asset Management declaring it is time to buy into the sector.
In its “Australia: Mining by the Numbers” report on non-ferrous metals, S&P said drilling activity had surged to $US634.4 million ($854m) in the March quarter, up 128 per cent from a year earlier.
The number of exploration holes drilled in the March quarter doubled from the previous quarter to about 920, the highest since at least 2014, when the report started and in a year when there were less than 300 holes drilled in the March quarter.
“Gold is typically the most targeted commodity,” S&P said. “However, specialty metals accounted for a larger portion of drilling targets in the first quarter of 2017, largely due to an increased focus on drilling for lithium.”
The move comes as mining services companies like ALS, Boart Longyear and, globally, Caterpillar, tip growth in mining orders and activity. Perennial Value Management fund manger Andrew Smith said the company’s Microcap fund was looking closely at mining services.
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