MoneyTalks: Tim Neesham has four ASX picks ready to get the rub of the green

MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from CPS Capital’s Tim Neesham.

Investment into micro caps has dried up over the past few years, leaving a lot of solid resources projects that would have been funded in another generation in purgatory.

But that doesn’t mean jewels can’t be found in the rough.

Neesham’s CPS Capital has a brief over about 60 mainly small-cap companies at any given time and says there are a bunch on his register with solid projects ready to get moving.

Market ructions

With markets being so risk-averse, it’s a slow burn for small caps to get their hands on the capital required to grow through the development stages.

“The reality is the market, as it stands, likes to stay liquid at the top and not take risk down at the bottom end, leading to fewer and fewer discoveries – especially in the resources sector,” Neesham says.

“Supply pressures, wages and growth have meant that there’s not much money left over.

“We stopped taking risks.”

“But you can only have so much pressure on supply and not be forced to take on risk. Risk must be taken at some point because everything, fundamentally, is supply-driven in the materials markets.

“It’s deemed too costly and the rewards are not as much as they should be for discoveries of late, however, at some point that is going to have to change and the market will be forced to listen.”

Uranium is one example, Neesham says.

“Spot contracts are the highest they’ve been for a long time due to inherent demand, yet equity isn’t flowing fast enough into exploration and development,” he noted.

Gold is no different, Neesham says, with the top-end producers making a tonne of money on the back of high spot prices, without that cash trickling down to the small end of the market.

But history tells us markets don’t stay that way forever.

With this in mind, Neesham points to four stocks with low share prices and good business metrics that could pop once enough investor interest turns in their direction.

Neesham’s golden pick

One such goldie, Vertex Minerals (ASX:VTX), has just poured its first gold bar from a rejuvenation of the Reward gold mine at the 225,200oz Hill End gold system in NSW’s prolific Lachlan Fold Belt.

It was here the largest piece of reef gold ever, the 286kg Holteman Beyer nugget, was found.

VTX has just completed the final raise to meet the terms for their already approved US$10m debt facility.

For early cashflow, the company plans to process three stockpiles around the plant which were compiled 15 years ago when the price of gold was just ~A$1,150/oz. Today’s spot gold price sits above $3,700/oz.

“After a $3.8m cap raise, VTX is now funded to get into production for hopefully great returns, given the low cost nature of the high gravity gold separation type ore body,” Neesham says.

“The company has freshly granted mining licenses, with an existing and currently being refurbished gold plant.”

The goldie is also targeting a small part of a bigger mineralised system to start production by the end of 2024.

“With ore sorting and reduced capex, what VTX is doing now is less risky to the equity,” Neesham says.

“It currently has a tiny EV of sub $10m, which for its forward catalysts is tiny, especially as it’s now fully funded into the 2-year ‘initial’ production cycle and is based on a >20% lower gold price than the current spot price.”

The uranium pick

Neesham also points to GTI Energy (ASX:GTR), which is currently drilling to increase pounds at its Powder River uranium project, as it moves towards a scoping study around Q1/Q2 2025.

The first 10 holes of a 76-hole campaign at its 5.71Mlbs at 630ppm U3O8 Lo Herma project wrapped up recently, with mineralisation meeting expectations for economic in-situ recovery mining methods.

Once the program is wrapped up towards the end of Q3, GTR intends to publish an updated resource estimate and exploration target range to support near-term development of a scoping study.

“In terms of corporate activity and given the position of Wyoming and the basin producing most of US uranium, there’s lots of upside. But also post-scoping study it will likely be re-rated given the nearology to willing and able producers, or even just on its standalone metrics,” Neesham says.

“It’s gone from a $30m market-cap in January to a sub-$10m one at the minute and all the while prices of yellowcake have skyrocketed.

“Uranium hasn’t quite had its day in the sun yet, but it will, and if GTR can prove up its pounds in the ground the market is likely to react.”

West Arunta in focus

Back in Australia, in the burgeoning West Arunta district in WA, critical minerals hunter Caprice Resources’ (ASX:CRS) Bantam project flanks WA1 Resources (ASX:WA1), Agrimin (ASX:AMN) and Encounter Resources’ (ASX:ENR).

The latter and former are two of the hottest explorers on the ASX thanks to their niobium finds.

Neesham says there are more and more minerals being found in the region and CRS has one of the largest landholdings in the area.

“It’s an early-stage explorer story, yes, yet CRS has a very large tenement holding in the area and is looking to take the next steps towards testing out the prospectivity (of the project) towards drilling in Q4 this year.”

Those steps include early-stage funding for the $6m market-capped junior as it looks to follow up what is emerging as one of the world’s only large supply sources of niobium outside Brazil.

Biotechs

Neesham says biotech is a growth market when mining, as it is now, is risk-averse. He points to Cleo Diagnostics (ASX:COV), which is moving towards FDA approvals for its ovarian cancer detection tech and has successfully obtained Institutional Review Board (IRB) approvals in both the US and Australia, essential for ensuring compliance of clinical trials.

Cleo is now moving forward with formalising trial site contracts and preparing for patient recruitment.

The international arm of the clinical trial will be overseen by Lindus Health, a respected Contract Research Organization (CRO) based in the US.

“Picking up early-stage ovarian cancer is a game-changer for people suffering with the condition across the world,” Neesham says.

“There’s no other competitor on the market with early-stage detection methods for ovarian cancer.

“It’s a biotech with a real market need and all the background has been completed, including peer reviews, and Cleo is moving forward with formalising trial site contracts and prep for patient recruitment.

“By the end of next year, there could be early-stage revenue for the company that could grow as it develops.”

Tim Neesham and CPS Capital hold shares in the companies listed above and provide them with capital-raising services.

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