ASX investors and newcomers remained in limbo this week as the AI-boom continues to look increasingly at odds with a much more sinister underlying reality. Wall Street’s S&P 500 is still flirting with record highs, but the rally is becoming increasingly narrow. In August, around 70 per cent of S&P 500 companies traded above their 50-day moving average. By early October, that figure had slumped to roughly 28 per cent, with a handful of AI heavyweights doing much of the heavy lifting. Beneath the highs, the market is looking increasingly fragile, leaving investors wondering which breaks first — stocks or bonds?
Closer to home, Albo and Minister for - expensive - Energy Chris Bowen headed to Fiji for a pre-COP climate summit holiday of grandiose proportions. Carrying an estimated $20 million price tag, Bowen’s summit attracted precisely zero international enthusiasm for its grandstanding, with even the leader of our closest ally, New Zealand, not bothering to show up and Albo the only G20 leader in attendance.
While global leaders abandon net zero grandstanding, Labor appears to have missed the memo. After taking aim in last week's Runners at Australia's Net Zero virtue signalling and its convenient approach to keeping coal out of sight and out of mind, we were almost tempted to think the NSW Labor Government had found a way to outdo itself. Enter the High Court's ruling on the Hunter Valley's Mount Pleasant coal mine expansion, adding another layer of legal uncertainty to an industry that remains one of Australia's most important economic lifelines.
The court ruled that NSW planning authorities had failed to properly consider the emissions generated when coal from the Mount Pleasant mine expansion was burned overseas. So, if we can't have affordable energy, then nobody can? The decision does not automatically ban new coal mines, but it sets a precedent that could turn future approvals into a legal minefield and send investors running for the hills.
And that is precisely the problem. Australia is already making life difficult for our last industry in which it holds a genuine global competitive advantage, despite its enormous contribution to export earnings, investment, regional jobs and government royalties.
The stupidity of the policy direction becomes difficult to ignore. What exactly happens when Australia makes it harder to supply a commodity the rest of the world still wants? Does India abandon efforts to improve living conditions for its 1.5 billion citizens? Does China suddenly stop making steel because NSW thinks it should consider emissions produced thousands of kilometres away?
Of course not. The demand doesn't disappear because Australia makes its own projects harder to approve. Buyers instead turn to Indonesia and other suppliers at a premium, while Australia's economy wilts away.
After killing the affordability of energy for our manufacturing industry, we are now putting up more legal obstacles in front of our coal industry while competing nations happily supply the very same markets - nailed it.
Mining investment runs on confidence that big, long-term projects can get the green light. Keep shifting the approval goalposts and billions of dollars in potential investment may simply pack their bags and head offshore.
The ASX had its own goalpost-moving moment this week, as buyers evaporated and capital headed for the exits ahead of what was shaping up as our very own AI superstar hitting the boards.
Firmus, the Nvidia-backed AI infrastructure company, looked set to deliver one of the biggest floats in Australian market history, seeking to raise billions at a proposed valuation of $44 billion – Woolworths entire market cap.
This was the moment at which something beyond the usual banks, miners and supermarket giants could dominate the local market: an AI infrastructure heavyweight backed by one of tech’s biggest names, promising to build the data-centre capacity needed to feed the world’s insatiable appetite.
Led by co-founder and disgraced former broker Oliver Curtis, Firmus had the story, the sector and the heavyweight backing. What it apparently couldn’t find, however, was enough investors willing to swallow the AI-inflated price tag. A former insider trader promising next to no debt and roaring EBIT in two years doesn’t mean you can slap a $44 billion valuation on the table and expect investors to bite.
Doubts soon mounted, with talks of a potential share repricing gathering pace as the supposedly “heavily in demand” $11-a-share IPO began to show cracks and analysts widely questioned whether the company’s lofty growth expectations had already been worryingly baked-in.
By Friday, the proposed record-breaking float had been pulled altogether, with Firmus’ founders - who stood to make billions on paper - blaming market volatility and prevailing conditions rather than, perhaps, a touch of greediness.
Our Runners list remained short again this week in a market still struggling to find its feet; however, the junior mining faithful still managed to deliver a few bright spots. Top honours went to a junior rare earths hopeful looking to follow in the footsteps of its recently acquired Brazilian rare earths brethren, after Lynas Rare Earths agreed to take out Meteoric Resources last week for a handy $968 million.
ALVO MINERALS LTD (ASX: ALV)
Up 257% (2.1c – 7.5c)
Bulls N’ Bears Runner of the Week is Alvo Minerals, which absolutely exploded as investors stampeded into its Brazilian rare earths play. A cocktail of promising heavy rare earth grades and a potentially much cheaper processing route has thrust the project into the spotlight, just as ionic clays are becoming the flavour of the month for Western supply chains, with Brazil emerging as a prime hunting ground.
Alvo’s Bluebush project sits on the northern slice of the Serra Dourada granite, the same host granite as the world-class Serra Verde mine, which USA Rare Earth agreed to acquire in April for a jaw-dropping US$2.8 billion ($4 billion). When you’re exploring in the shadow of a multi-billion-dollar operation, you’re already playing a different game.
The company says its drilling has defined an ionic clay system showing all the right signs. The mineralisation also delivered a suite of highly prized heavy rare earths, dysprosium and terbium, two elements critical for high-performance magnets.
Top results included 6m at 2537 parts per million total rare earth oxide (TREO) and 65ppm DyTb from surface, including a richer 3m at 3415ppm TREO and 95ppm DyTb. Another hole returned 11m at 1032ppm TREO, with most holes ending in mineralisation, suggesting the rare earths system remains open at depth.
All up, the valuable heavy rare earth oxides (HREO) account for an impressive 22 per cent of the TREO mix. In a market where these heavy elements can fetch up to 16 times the price of their lighter cousins in China, that kind of enrichment is geological gold.
Ionic clays are attracting serious attention from the big end of town because, in the world of rare earths, processing is king. Unlike hard-rock deposits that require expensive, complex and often environmentally challenging processing, the rare earths in ionic clays are loosely bound to weathered granite. This opens up the possibility of a simpler, lower-cost recovery route that could make all the difference to a project’s economics.
The timing of Alvo’s run is also notable, coming just after Lynas Rare Earths tabled its A$968 million bid for Meteoric Resources, another ionic clay player, just last week. That deal underlines the immense strategic value that major players are placing on these types of deposits as they scramble to secure supply chains outside of China.
Alvo is now targeting infill auger drilling at its Boa Vista, São Bento and Praia prospects ahead of a maiden mineral resource estimate. That will run alongside crucial diagnostic and column-leach test work to see just how much of that valuable heavy rare earth content is in an easily recoverable ionic form. The next challenge is to turn these promising grades into a credible resource and a workable recovery process. For now, though, one thing is clear: Alvo has well and truly put itself on the rare earths map.
PIONEER MINERALS LTD (ASX: PMM)
Up 133% (18c – 42c)
Leaving its run late in the week but making a serious splash was polymetallic player Pioneer Minerals, which more than doubled on Friday after securing an option to acquire the high-grade San Francisco gold-copper-silver project in Argentina’s San Juan province - the country’s premier address for mining.
Investors didn’t need a second look to see why the deal lit a fire under the company’s share price. A review of the historical drilling data revealed a series of thick, high-grade intercepts at the main San Francisco breccia pipe, including a stunning 109-metre interval grading 4.94 grams per tonne (g/t) gold, 109g/t silver and 1.13 per cent copper.
Other eye-catching hits include an 83-metre hit running at 4.4g/t gold, 82g/t silver and 0.4 per cent copper, and 85m at 2.7 g/t gold with strong silver and copper credits. As if that wasn’t enough, a deeper hit of 72m grading a hefty 3.47 per cent copper further underscored the system’s raw potential.
Critically, the company says its mineralisation remains strong at 500m depth and is still open, with drill core that on-site geologists have described as a “dream”, chock-full of stunning copper sulphides.
Beyond the main breccia pipe, the project offers a smorgasbord of exploration upside.
The tenement package hosts more than 70 other mapped breccia structures, yet only nine have ever seen a drill bit – and even those were barely tested with just one or two holes each.
Add to that around 150 mapped quartz vein systems, many of which are already known to be mineralised and over 90 surface samples returning more than 1 g/t gold, and the sheer scale of the opportunity starts to become clear.
The project’s address is another major drawcard. San Juan’s provincial mining authorities identify the Calingasta region as part of a major copper exploration corridor. It is home to several world-class projects, including McEwen Copper’s Los Azules, one of the planet’s largest undeveloped copper porphyries and Glencore’s El Pachón project.
Pioneer says it has also lined up a $1.8 million capital raise at 18 cents a share to fund its next steps and is moving quickly on all fronts.
DALAROO METALS LTD (ASX: DAL)
Up 127% (7.5c – 17c)
Rounding out our Runners list is a regular to these pages, in international explorer Dalaroo Metals. The multi-continent explorer caught the market’s eye with what looks to be a major new gold discovery in the humming Côte d'Ivoire.
Maiden drilling at its Bondoukou project delivered a spectacular intercept of 18 metres at 7.31 grams per tonne of gold from just 63m downhole.
Judging by the market’s ferocious reaction, punters are firmly in Dalaroo’s corner. The company’s shares rocketed 127 per cent before closing at 15.5 cents on its biggest turnover in almost a year, having touched an intra-day high of 17 cents.
The stellar result came from the first two orientation holes at the company’s Wilfred target and, importantly, marks the first-ever systematic drilling across the project’s identified 7-kilometre-long gold anomalous corridor. It’s one thing to have a big soil anomaly; it’s another thing entirely to hit high-grade gold with your first proper drill holes.
Better still, the drill bit appears to have vindicated a trail of geological breadcrumbs that management has been patiently following from day one. The company, which can earn up to an 80 per cent interest in the project, was initially drawn to Bondoukou by a prominent magnetic feature that lined up perfectly with extensive historical and active artisanal gold workings. It’s a classic exploration story of following the old-timers and applying modern science.
Notably, this wasn’t a one-hit-wonder. Beyond the stunning headline interval, the discovery hole also returned a second, deeper zone of 16m grading 1.46 g/t gold from 113m. The program’s first hole also returned a solid 23m at 2.14 g/t gold from surface, confirming the system has both grade and scale.
Wasting no time, Dalaroo will shortly launch a fresh five-hole, 1250-metre program to test the strike and depth of this high-grade discovery. With Côte d’Ivoire fast emerging as one of West Africa’s hottest gold addresses and a maiden discovery hole that sent its shares rocketing more than 126 per cent, Dalaroo has given the market plenty of reason to believe it could be onto something big.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
