Closing Bell: Resource stocks win ASX tug of war as market ends flat
Gold lifts 1.4pc to five-week high
Banks mostly lower as profit taking continues
Resource gains outweigh bank sell down
It was a veritable tug of war on the ASX today as surging resources stocks went to war with floundering banking shares and managed to snatch victory right at the last second.
The ASX lifted just 9 points or 0.1%, struggling into positive territory in the last ten minutes of trade.
The sell down in major banking stocks continued throughout the day, undercutting the resource sector's momentum.
Commonwealth Bank (ASX:CBA) was hit hard, down another 3%. NAB (ASX:NAB) also took a sizeable whack, shedding 2.69% while the rest of the top 7 fell between 1.27% and 0.34%.
The exceptions were Macquarie (ASX:MQG) which added 0.23%, and QBE (ASX:QBE), which tipped up 0.22%.
Iron ore and gold were the champions of the materials sector and the greater market today, clawing higher on rising commodity prices despite a day of choppy trading that trended mostly negative.
Healthcare also put in an excellent showing, with several mid and small cap stocks climbing. Botanix Pharmaceuticals (ASX:BOT) jumped 9.6% and Clarity Pharmaceuticals (ASX:CU6) 7%.
Still, it was iron and gold miners that topped the gainers lists today. More on the iron gang in a second.
Pantoro Gold (ASX:PNR) jumped 12%, West African Resources (ASX:WAF) 8% and Ramelius Resources (ASX:RMS) 7.9%.
Is the iron ore rally sustainable?
Iron ore prices shot up to four-month highs overnight, hurdling the US$100 per tonne mark to sit at US$104.1 presently.
News of a new megaproject out of China was the core driver of the push higher – Beijing intends to invest 1.2 trillion yuan ($260 billion) in a hydropower dam on the Tibetan Plateau.
Iron ore miners are chomping at the bit to get a piece of the action. BHP (ASX:BHP) jumped 2.3%, Fortescue (ASX:FMG) 3%, and Rio Tinto (ASX:RIO) 3.3%.
Unfortunately, analysts are warning iron ore's latest bullish run doesn't reflect market fundamentals.
Market moguls at Citigroup and UBS reckon the iron market is trending toward oversupply.
Rio Tinto's Simandour project is set to ramp up production to 48 million tonnes of iron ore per year by 2028, accounting for about 5% of global supply all on its lonesome.
UBS reckons the iron ore market will be in surplus by 100 million tonnes by 2027 at current rates.
"The sustainability of current prices depends largely on whether China's promised policy support materialises in the form of actual construction activity and steel demand," Westpac (ASX:WBC) acting chief sustainability officer and commodities strategist Michael Chen said.
"Without concrete demand increases, the fundamental case for $100+ iron ore becomes difficult to justify."
ASX SMALL CAP LEADERS
Today's best performing small cap stocks:
Code Name Last % Change Volume Market Cap
IS3 I Synergy Group Ltd 0.012 300% 7074192 $5,118,900
PAB Patrys Limited 0.002 100% 1540555 $2,365,810
VR8 Vanadium Resources 0.041 78% 42838618 $12,978,713
MPA Mad Paws 0.13 73% 36137123 $30,468,169
CUL Cullen Resources 0.006 50% 247093 $2,773,607
AS2 Askarimetalslimited 0.016 45% 19518384 $4,445,878
LMG Latrobe Magnesium 0.016 45% 17547486 $28,892,490
ALR Altairminerals 0.004 33% 15049123 $12,890,233
FAU First Au Ltd 0.004 33% 1206788 $6,228,874
SHP South Harz Potash 0.004 33% 56178 $3,849,186
KGD Kula Gold Limited 0.009 29% 16412263 $6,448,776
BIT Biotron Limited 0.0025 25% 619581 $2,654,492
FHS Freehill Mining Ltd. 0.005 25% 50000 $13,655,414
MMR Mec Resources 0.005 25% 155000 $7,399,063
TMK TMK Energy Limited 0.0025 25% 11279067 $20,444,766
GLL Galilee Energy Ltd 0.011 22% 2306250 $6,364,736
AAU Antilles Gold Ltd 0.006 20% 2098629 $11,895,340
AOK Australian Oil. 0.003 20% 473088 $2,594,457
AON Apollo Minerals Ltd 0.006 20% 12688298 $4,642,284
OLI Oliver'S Real Food 0.006 20% 83366 $2,703,660
PRM Prominence Energy 0.003 20% 200000 $1,216,176
SLZ Sultan Resources Ltd 0.006 20% 1443673 $1,157,350
TFL Tasfoods Ltd 0.006 20% 334313 $2,185,478
NTI Neurotech Intl 0.025 19% 3221353 $22,042,060
WMG Western Mines 0.285 19% 297333 $23,229,203
In the news…
The ASX has hit the emergency breaks on iSynergy Group (ASX:IS3), slapping the marketing platform with a 'Please explain' and a trading halt after the company's shares surged 300% intraday.
Management says it's working on a response to the ASX's query and expects to be out of suspension by Thursday, but no other details were forthcoming.
Vanadium Resources (ASX:VR8) has locked in a two-year DSO offtake deal with China Precious Asia Limited for vanadium-rich magnetite, agreeing to supply 100,000 metric tonnes of direct shipping ore per month.
The deal hinges on two things; the official start of mining operations at the Steelpoortdrift vanadium project and the two parties finalising pricing terms by the end of August.
Mad Paws (ASX:MPA) has entered a scheme implementation deed, agreeing to be acquired by Rover Group, Inc at $0.14 per share. The deal values Mad Paws at about $62m.
Separately, MPA is offloading its online e-commerce division under the Pet Chemist brand for about $13m in cash consideration.
Digital content provider Streamplay Studio (ASX:SP8) is climbing on some solid quarterly results that saw the gaming company achieve a cash flow positive quarter, operating on a surplus of $390k.
SP8 cashed customer receipts totalling $1.44m, maintaining cash reserves of $7.7m despite investments in its game development studio Noodlecake Studios, the studio behind mobile games Super Flappy Golf and Sacre Bleu.
ASX SMALL CAP LAGGARDS
Today's worst performing small cap stocks:
Code Name Last % Change Volume Market Cap
AUH Austchina Holdings 0.001 -50% 37338 $6,050,767
MIOR Macarthur Minerals 0.002 -33% 16728 $299,498
PFM Platformo Ltd 0.055 -29% 33012 $7,307,939
GTR Gti Energy Ltd 0.003 -25% 9682499 $14,835,762
PKO Peako Limited 0.002 -20% 4801244 $3,719,355
PRX Prodigy Gold NL 0.002 -20% 28500 $15,875,278
RLG Roolife Group Ltd 0.004 -20% 4598095 $7,963,906
BEL Bentley Capital Ltd 0.009 -18% 5658 $837,407
SFM Santa Fe Minerals 0.285 -17% 115914 $25,122,482
ALY Alchemy Resource Ltd 0.005 -17% 307081 $7,068,458
AMS Atomos 0.005 -17% 179652 $7,290,111
SIS Simble Solutions 0.005 -17% 525549 $6,493,982
SKK Stakk Limited 0.005 -17% 548791 $12,450,478
UNT Unith Ltd 0.005 -17% 8994656 $8,872,713
TOU Tlou Energy Ltd 0.021 -16% 25000 $32,464,608
LOC Locatetechnologies 0.11 -15% 1468361 $30,572,664
ANR Anatara Ls Ltd 0.006 -14% 14000 $1,493,686
BLU Blue Energy Limited 0.006 -14% 1053411 $12,956,815
BYH Bryah Resources Ltd 0.006 -14% 7203753 $6,789,675
CMO Cosmometalslimited 0.019 -14% 209990 $7,086,984
NWM Norwest Minerals 0.013 -13% 25694 $14,525,378
FXG Felix Gold Limited 0.17 -13% 1812100 $85,582,148
ATS Australis Oil & Gas 0.007 -13% 110000 $10,544,500
NAE New Age Exploration 0.0035 -13% 617716 $10,823,646
WEC White Energy Company 0.035 -13% 94 $12,464,796
IN CASE YOU MISSED IT
Legacy Minerals (ASX:LGM) has kicked off a 10,000m diamond drilling campaign at its Fontenoy platinum group elements and copper-gold project in NSW.
Trading Halts
American Rare Earths (ASX:ARR) – cap raise
I Synergy Group (ASX:IS3) – ASX price query
Octava Minerals (ASX:OCT) – cap raise
Sun Silver (ASX:SS1) – cap raise
West Coast Silver (ASX:WCE) – cap raise
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Sam Hawley: How easy is it to trick the Australian Tax Office? Well, for fraudsters it's not hard at all and plenty have done it costing taxpayers billions of dollars that have never been recovered. Today, Angus Grigg on his Four Corners investigation into the biggest GST scam in history and how the ATO dropped the ball. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily. Sam Hawley: Angus, you've been hard at work looking into what's going on at the Australian Tax Office. And you've really been having a deep look into this huge GST scam. Now, this unfolded in no other than Mildura in north-west Victoria. So, take me there and tell me about local resident Sarah. Angus Grigg: Yeah. Mildura is a really beautiful town, an irrigation town on the Murray in North West Victoria. And this GST scam really took off in Mildura. And it really was circulating within a sort of population that you might say is low socioeconomic groups, people on welfare, people with addiction issues. And we went to interview one person called Sarah. She was going through quite a bit of financial hardship at the time. I think she'd separated from her partner who was facing pretty serious charges at the time as well. And she was short of money because she needed to have some dental work done. So one of her friends showed her how to use a business that had been registered and an ABN linked to GST to claim GST refunds fraudulently. 'Sarah': The people that I was associating with at that time, they had done it and told me how easy it was to get a large amount of money quickly. And I just thought at the time it was a good idea because I was in a bit of financial trouble. Angus Grigg: She pretended, if you like, to be a hairdresser, despite the fact that she had no hairdressing qualifications. She'd never worked in a hairdresser, hadn't hired premises, had no equipment. And so she logged into her myGov account and first of all, claimed $15,000 and then did it a second time and got another $15,000. 'Sarah': I don't even really still understand how it went through. I was a single parent and then all of a sudden I'm a hairdresser that's getting this return put into my account with no other payments from clients or anything like that to balance it was needed. Like no proof. Angus Grigg: Now, bear in mind, the money went into the same account as her welfare payments and the money went within about 10 days without any verification, without any checks, without anyone from the tax office ringing and saying, what did you spend this money on? Do you have hairdressing qualifications? Have you hired premises? You know, she just absolutely couldn't believe how easy it was. 'Sarah': Yeah, I just couldn't believe it that it was just sitting there on my everyday access debit bank card. Angus Grigg: Now, the other thing to bear in mind, to receive a GST refund of $30,000, she would have needed to have capital expenditure or bought stock and other items for her hairdressing business of about $300,000. Now, surely a single mother living on welfare, getting family tax benefits, that should have been a red flag for the tax office. Sam Hawley: Wow. Okay. So Sarah, which is not her real name, just by the way, you've changed that for this story to keep her anonymous. She just tells the ATO she's a hairdresser and then the tax office falls for it. That's extraordinary. Angus Grigg: It is. And the fact that you don't need a receipt, you don't need any proof of the line of work you're in is extraordinary. And that's because the tax office basically fired most of the humans in the loop and started relying on algorithms or computers, if you like, to make these payments. They wanted to ensure the timely payment of GST refunds to businesses. But in doing that, they really opened the door up to fraud. Sam Hawley: Right. Sure. So the tax office wants to streamline things. But in the meantime, people like Sarah are all of a sudden dabbling in fraud. And as we've mentioned, she's not the only one. There's a lot of other people doing a very similar thing. Tell me about Linden Phillips. What was he up to? Angus Grigg: Linden Phillips, once again from Mildura, for us, he was like patient zero. It looks like he was the really one of the very, very early people in this scam. So what happens is that Linden Phillips gets out of jail in August 2021. And he already has a company registered. And so he reactivates his GST registration through his ABN and his MyGov account. And then within a couple of weeks of getting out of jail, he does what I'd sort of call a test run. And he claims $13,000 in GST refunds from the tax office. Once again, no documents, no receipts, no verification required. He gets that money within a couple of weeks and clearly then thinks, OK, I'm going to go for the big one. And so what he does is he lodges 46 backdated GST claims for an amount of $821,000 in GST. And the real kicker here is that for most of the period those GST claims are lodged, he's actually in jail. Sam Hawley: Oh my gosh. Angus Grigg: I know. He just couldn't make it up. Sam Hawley: What does he do with all that money? Angus Grigg: Well, of course, he spends it, right? Within a couple of weeks, the money's completely gone. He buys himself a second-hand Porsche. Somewhat endearingly, he buys his mother a house. But the really damning thing here is that the tax office notice it. Finally, someone, there's a human in the loop and they pick up the fact that, hey, maybe something's a bit wrong here. And so they ring him up and he says, oh yeah, no, it's all legitimate. I'll get my accountant to call you. The accountant never calls. They send him some emails. They write him some letters. He ignores them all. And the really damning thing here is the tax office does nothing for four months. And in that four month period, this scam absolutely explodes. So what we did is we went back and we deconstructed, if you like, the tax office's narrative. And the narrative was that this fraud took off on social media. The tax office noticed it. They cracked down really hard, really quickly, and they brought it under control. Now we sort about testing that idea. Sam Hawley: So the ATO says it did this great job. It cracked down on this fraud. But what actually happened? Because you actually had a look at that and discovered, in fact, the ATO didn't do much at all. Angus Grigg: No, exactly. So Linden Phillips does finally get caught, but it has absolutely nothing to do with the ATO. It all comes down to the smarts of a local detective in Mildura named Vanessa Power. Now, she is attending Phillips's house on a drugs and gun charge, and she searches his premises, his house, and she confiscates a phone. And using the sort of smarts that the ATO should be employing, she sees that on his phone there appears to be a pretty elaborate GST scam. And in fact, it looks as though that Linden Phillips had helped 60 other people perpetrate this scam. Linden Phillips is arrested. And then a few weeks later, the ATO finally launch what they call Operation Protego, which is to crack down on this GST scam. Sam Hawley: Wow. Okay. And at that point, of course, Sarah, who we spoke about earlier, she was also arrested back in December 2022. But the thing is, the money, it's sort of gone, right? 'Sarah': I can't pay it back. It's not even an option at the moment. Or it probably never will be. Sam Hawley: Is there any way the tax office can actually get these funds back? Angus Grigg: Well, this is the point, right? In the end, $2 billion was stolen from the tax system by 56,000 people. Now, the ATO tell us that of those 56,000 people who perpetrated this scam, just 120, I think it might be 122 now, have been convicted. Secondly, of the $2 billion stolen, the ATO tells us that only 160 million, or around 8% of that, has been recovered. Sam Hawley: And, Angus, that money, it really is just a drop in the ocean, right? Because you've also looked at all the other funds that the ATO hasn't managed to collect, and you've spoken to Karen Payne. Now, she's a former Inspector General of Taxation. She basically says if the ATO had collected what it was owed, then we would all be paying less tax. Angus Grigg: Yeah. Karen Payne, she really focused on what's called collectible debt. And that is this sort of giant number that the ATO doesn't like to talk about. And when she started looking at it, it was about $30 billion. Then it rose to about $50 billion. The figure is now $53 billion. And that is the amount of money or taxes that the ATO has levied, if you like, but not collected. Karen Payne, Inspector General of Taxation, 2019-24: The large percentage of the debts that were due were in fact owned by a very small number of taxpayers or they're related to a small number of taxpayer accounts. So you'd kind of think it's a small number of people you need to be chasing. Angus Grigg: And the point that Karen Payne was making is that if we collected all that tax, perhaps we would not have to pay as much tax, all of us, but also we'd have more money to spend on really basic things like schools, roads and hospitals. Karen Payne, Inspector General of Taxation, 2019-24: The fact that it keeps rising is troubling. So it's fundamental, I think, that we've got good administration of the tax system because the integrity of the tax system is fundamentally important to all of us. It pays for all of the services that we benefit from. Sam Hawley: Angus, despite everything that you have said, which is frankly really concerning, the ATO itself thinks it's doing a pretty good job, right? Because Chris Jordan, who was the tax commissioner up until 2024, he's been putting a rather positive spin on the ATO's work. Angus Grigg: Yeah. This is the really extraordinary thing. Despite all these scandals, the ATO tells us they are doing a great job. Just before Chris Jordan stepped down as tax commissioner, he did a victory lap, if you like, at the National Press Club, and he pointed out all the great, terrific things that the ATO has done. Chris Jordan, Tax Commissioner, 2013-24: We've successfully charted a massive program of transformation. We've cut red tape and we've modernised our administration of the tax system as part of the digital revolution to make tax just happen.
