It looked like Santa had shown up early, only to turn around and swipe all the presents this week.
As silly season officially kicks off, the ASX-listed corporate suits have packed up for their holiday homes, leaving the market limping along on whatever momentum the algorithms can sustain.
No major headlines sang out in markets this week, especially compared with the chaos of the Trump-fuelled past nine months. However, the backlogged US jobless data from last month did make an appearance, hinting at a potential soft-landing for the market.
While Fed funds futures are still pricing in a 90 per cent chance of a cut next week in the US, Australia’s Reserve Bank is likely to slam the door shut on any further cuts after inflation ticked back up towards 3.8 per cent.
Inflation is heating up again and economists are blaming a two-tracked western economy, as different parts of society move in opposite directions.
Market analysts say wealthier households are still spending on expensive holidays and fancy new cars this Chrissie, while the average man on the street is struggling to keep up with mortgage payments amid the cost-of-living crisis.
Bank of America’s take on that phenomenon – “the floor stabilises before the ceiling finally caves in” – appears to be a polite way of saying the pain hits the battlers first. Stock indices are likely to keep pushing towards record highs thanks to a handful of titan companies. But beneath that, a broader slowdown is already happening in the parts of the economy that rely on volumes – the small caps.
Crypto volumes are feeling the pain too, with Bitcoin bellyflopping at the start of the week, down more than 30 per cent in six weeks, signalling a Trump trade unwind. The alt-coins - the ones that sound like Wi-Fi passwords – are also getting pole-axed as the digital world continues to turn risk-off.
Copper, meanwhile, is charging to new all-time highs as inventories continued to evaporate, with half the big mines flagging disruptions to operations and traders hoarding the red metal like it’s the last slab on earth.
The higher copper price dragged BHP and Rio Tinto up. But the real beneficiary was the new “resources sheriff” in town - China’s Zijin Mining – up from a $10 billion market cap in 2016 to over $110 billion this week. The Chinese mega miner is now breathing down BHP’s neck to be the world’s biggest, thanks largely to its state bank's zero-interest funding and a 30-year shopping list from the all-seeing leaders over at the Chinese Communist Party.
Zijin’s gold spin-out just hauled in $3.3 billion in a Hong Kong float that was an eye-watering 700 times oversubscribed. Remarkably, the subsidiary alone is expected to churn out nearly as much gold as Northern Star by next year.
Gold and silver stocks took a bath this week in the traditional pre-Christmas profit-taking haircut. Silver kissed a fresh all-time high before the party poopers arrived with sell tickets.
This week’s Bulls N’ Bears Runners list was thinner than a mining conference vegan menu, but the Runner of the Week managed to easily take out top spot with a move of some serious velocity.
The other contenders are a nice mix of an IPO standout, a cashed-up incubator, and an African merger, all in the expected Runners flavour of the gold sector.
PHOSLOCK ENVIRONMENTAL LTD (ASX: PET)
Up 467 % (0.6c – 3.4c)
The Bulls N’ Bears Runner of the Week is water remediation specialist Phoslock Environmental, after the company, which has historically made a motza out of China’s enormous dirty water market with its phosphorus-binding water treatment, also called Phoslock, announced a revival of its famous product.
Phoslock’s phosphorus-binding treatment product previously generated substantial revenue from China’s extensive water pollution challenges, with sales reaching $3.5 million in the first full year after market entry in 2017.
Production was halted in 2021 amid a demand slump, but ongoing sales have depleted inventories, prompting the decision to restart manufacturing at its Chinese facility in January next year.
Initially, operating on a single shift with an annual capacity of approximately 3000 tonnes, the plant retains the flexibility to scale to double shifts if demand warrants. Phoslock plans to deploy its solutions across polluted lakes, rivers, canals and reservoirs in China’s overpopulated regions.
Trading volumes exploded, with 265 million shares changing hands on Wednesday alone – exceeding the total for 2023. The share price jumped from last Friday’s 0.6c close to a high of 3.4c, up some 467 per cent on more than $10 million in turnover.
Following two extended suspensions - one from September 2020 to September 2022 related to self-reported fraud, bribery and mismanagement concerns, and another from August 2023 to August this year – Phoslock appears positioned for a structured recovery. If production ramps smoothly and Chinese environmental initiatives regain momentum, this could mark a pivotal shift from survival mode to sustained growth.
BLACK HORSE MINING LTD (ASX: BHL)
Up 90% (20c – 38c)
Coming in at a distant second on the week was fast-starting, freshly minted goldie Black Horse Mining.
The company stormed onto the ASX on Tuesday, with a debut that got punters emptying their pockets after completing an $8 million float at 20c per share, with cornerstone support from Province Resources contributing $3 million, to secure a 46.5 per cent stake.
After listing, the shares immediately moved to a 38c peak on opening day – a 90 per cent premium to the issue price on a very handy $600,000 worth of volume for an opening day.
Black Horse’s flagship is the Mt Egerton project outside Ballarat, within the prolific Bendigo-Ballarat gold province - a district renowned for producing over 80 million ounces historically.
The company aims to revitalise the high-grade goldfield, building on legacy mining records documenting robust production grades from the 19th-century rush, which would make today’s majors positively blush.
Black Horse says previous exploration has delineated high-grade intercepts confirming remnant mineralisation within 100m of surface, alongside evidence of deeper extensions from historical workings.
The tenement package hosts multiple prospects, underscoring district-scale potential for a significant high-grade resource base that could support near-term development and longer-term expansion.
A drill rig has already been mobilised to start testing the old fields' shallow targets, with the strategy focused on identifying overlooked high-grade lodes amid the historically fragmented goldfield operations.
Management says Mt Edgerton provides a perfect opportunity to apply modern techniques to underexplored structures, potentially unlocking value in a jurisdiction with proven infrastructure and positive permitting pathways.
With a focused asset in a tier-one postcode and substantial backing from Province, Black Horse has transitioned seamlessly from IPO to active explorer, positioning it as a noteworthy contender in the resurgent Victorian gold narrative.
DGR GLOBAL LTD (ASX: DGR)
Up 84% (2.5c – 4.6c)
Snatching bronze is resources incubator DGR Global, which is playing the power broker this week over its once wholly owned baby in SolGold Plc’s mammoth Cascabel copper-gold project in Ecuador.
Almost 95 per cent of DGR’s value is tied to its 6.8 per cent holding in SolGold, which now owns Cascabel.
This week, SolGold rejected a conditional non-binding takeover proposal from Jiangxi Copper at 26 pence per share, prompting an immediate rally in SolGold’s London-listed stock to 30p - a 4p premium to the bid or $1.87 billion in market capitalisation.
For DGR, this values its stake at about A$127 million - roughly triple its market capitalisation of $40 million - highlighting a substantial discount opportunity for investors seeking a piece.
DGR is SolGold’s fourth-largest shareholder, trailing the big boys in Jiangxi, BHP and Newcrest, underscoring just how strategic this copper-gold porphyry really is.
SolGold was originally founded and incubated by DGR before its 2006 London listing and controls the Cascabel project in northern Ecuador on the Andean Copper Belt – a corridor hosting an estimated 25 per cent of global copper resources and production.
An independent pre-feasibility study outlined a staged development of the core Alpala deposit at the site and forecasts a mouthwatering initial 12 million tonnes per annum underground operation, with $1.55 billion in pre-production capex.
Using conservative assumptions of just US$1750 ($2650) an ounce gold and US$3.85 ($5.81) per pound copper, the study projected a $3.2 billion after-tax net present value, a 24 per cent internal rate of return. Free cash flow of US$7.1 ($10.7) billion is expected to flow across the first decade from mining just 18 per cent of the resource in the first 28 years of production - yikes.
At current record copper and gold prices, the metrics could blow out considerably, boosting the project’s economics and potentially tempting global majors to lock in a multi-decade copper cornerstone.
SolGold points out that the inclusion of the adjacent Tandayama deposit with Alpala is expected to bolster its project metrics further, spelling a potential juicy payout for DGR, whose shares advanced to 4.6c by mid-week on nearly $2 million in volume.
As a seasoned incubator, DGR Global has many fingers in multiple pies, but has proved that you only need one roaring success in a potential tier-one development to make it to the big leagues.
AFRICAN GOLD LTD (ASX: A1G)
Up 75% (31c – 55c)
Rounding out our Runners is a West African explorer whose name says it all. African Gold surged this week following a merger proposal from its largest shareholder, TSX-listed Montage Gold ($3.5 billion market cap), in a transaction that values the ASX junior at $264 million in all-scrip terms.
The deal is targeted at the company’s flagship Didievi gold project, which hosts a 989,000-ounce resource at 2.5 g/t gold across 12.4 million tonnes, plus several additional emerging prospects, all with multi-million-ounce potential.
Montage’s African portfolio is anchored by its Koné gold project, just 200km from Didievi, where it is projecting a serious annual production of more than 350,000 ounces following first pour in mid-2027.
The West African gold space was positively chomping at the bit this week as Monday’s merger merely served as the warmup act to be followed up by Wednesday’s all-scrip bid by Perseus Mining to scoop up ASX brethren, Predictive Discovery, valuing Predictive’s 5.5 million ounces of gold grading 1.66g/t at an eye-watering $1.62 billion.
The Montage-African deal represented a 59 per cent premium for African Gold shareholders and the market swiftly obliged, with shares running to a high of 55c on the week, up 74 per cent from last week’s close of 31.5c, on $35 million in traded shares.
Management says the board-approved merger validates Didievi’s scale and strategic location in the now-favourable Côte d’Ivoire, providing African Gold’s investors with continued exposure through a better-capitalised big brother, as sentiment seemingly amplifies across West Africa’s gold-printing players.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Andrew Todd
