2 ASX small-cap mining shares to sell: Experts

The S&P/ASX Small Ords Index (ASX: XSO) has fallen 10.4% since the war in Iran began, but is 9% higher over the past 12 months.

The S&P/ASX 300 Metal & Mining Index (ASX: XMM) has also dropped 14.4% since the war started, but is up 38% over the past year.

ASX mining shares have been on a tear over the past year as commodity prices have lifted and Australia commenced a new mining boom.

ASX small-caps have also outperformed over the period, largely due to interest rates falling in many Western nations.

The war in Iran may reverse this tailwind, as we’ve seen today with the Reserve Bank of Australia lifting rates again by 0.25%.

As always with small-caps, stock selection is critical.

The following two ASX small-cap mining shares have rocketed over the past 12 months, and these experts say it’s time to sell.

Let’s find out more.

EQ Resources Ltd (ASX: EQR)

The EQ Resources share price is 33 cents, down 9.7% on Tuesday but up 713% over the past year.

EQ Resources owns a tungsten mine in Mt Carbine in North Queensland, and also holds gold exploration licences in NSW.

The company’s long-term ambition is to become Australia’s pre-eminent producer of tungsten, which is used to harden metals.

This month, Morgans issued a new note downgrading this ASX small-cap mining share from a speculative buy rating to a trim rating.

The broker increased its 12-month price target from 16 cents to 23 cents.

Morgans explained the change:

The ammonium paratungstate (APT) price continues to climb, above US$1,600 per metric tonne unit (mtu – 10kg).

We have lifted the modelled short-term price to US$1,300/mtu, and our long-term price from US$600/mtu to US$700/mtu.

With the share price above our target price, we lower our rating to TRIM from Speculative Buy.

Morgans added:

Continued strength in the tungsten price, a most critical metal, could lead to a further increase in our target price.

Lunnon Metals Ltd (ASX: LM8)

The Lunnon Metals share price is 40 cents, down 1.3% today but up 98% over the past 12 months.

Lunnon Metals is a nickel explorer with assets in the Kambalda district of Western Australia.

On The Bull this week, Nathan Lodge from Securities Vault revealed a sell rating on this ASX nickel mining share.

Lodge explained:

The company’s strategy centres on exploring and advancing sulphide nickel deposits in a region historically known for high grade discoveries and established mining infrastructure.

However, global nickel prices have been under sustained pressure as supply from Indonesia has increased rapidly, creating a structural oversupply in the market.

For companies, such as Lunnon Metals, exploration success isn’t sufficient to drive value if the underlying commodity price environment remains weak.

The nickel price is US$17,485 per tonne on Tuesday, up 4% in the year to date and up 7% over the past 12 months.

The post 2 ASX small-cap mining shares to sell: Experts appeared first on The Motley Fool Australia.

More reading

• Why BHP, EQ Resources, Lottery Corp, and Woodside shares are falling today
• This newly-producing ASX gold company could almost double in value: Broker

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.