SUNDAY ROAST: The small caps that lit a fire under Stockhead’s experts this week
Director, RM Corporate Finance
Gold’s been the hero of a dank dish since the Anxieties of Easter set in. It’s now up over 10% year-to-date with Kitco absorbing a Gallup survey which reports some 25% of Americans reckon gold is the most preferred long-term investment behind only real estate.
Our Guy Le Page notes the futures market “remains in contango”, with June futures trading at US$1,994/oz.
Mid-week saw a slump in both gold and silver prices to US$1,988/oz and US$23.72/oz respectively as the USD firmed and 10-year treasury yields climbed. Gold finished the week at US$2,010/oz.
But it’s a lithium stock that Guy is tracking this week…
Voltaic Strategic Resources (ASX:VSR) has been on a tear recently after announcing multiple thick pegmatite intersections from its 15-hole, Phase 1 drilling program at its Andrada prospect, part of the Ti Tree project in Western Australia.
If you’re a lithium fan, you’ll understand what Guy’s interested in when he notes widths “up to 58m of continuous pegmatite were returned from surface with better intercepts”.
Yep, it’s big potential. The company is anticipating assays in around six weeks. The region has good provenance and sits along strike from Delta Lithium Limited (ASX:DLI), which has also returned multiple intersections from its nearby Yinnetharra Project with impressive grades and width.
Voltaic has an enterprise value of around $20 million with just over $9 million in cash following the “unlimited generosity” of RM Corporate Finance (of which Guy is a shareholder and director) that was lead manager to a two tranche $7 million share placement at 5 cents.
Planning for a Phase II drill program is underway and Le Page notes that there are “apparently over 300 mapped pegmatites with only 10% of the tenement so far explored”.
“Delta is turning the entire state of Western Australia into Swiss cheese by the look of it starting off with a 90,000-metre program at Yinnetharra with an exploration target of around 80Mt.” Le Page notes.
“Keep your eye on this one and be prepared for some high voltage action. What could possibly go wrong…”
Broker Euroz Hartleys has a Speculative Buy recommendation on Blackstone Minerals (ASX:BSX), with a target price of 50c (vs the current price of 15c).
The broker recently attended a site visit to Blackstone’s Ta Khoa Nickel Project, which has access to cheap and reliable renewable power. Euroz sees that as a key advantage for its aspirations as a vertically integrated (green) miner.
The company has a pre-feasibility studies capex of around US$360m, which is expected to be updated in the DFS for the integrated operations.
Broker Barclay Pearce Capital has a Buy recommendation on Baby Bunting (ASX:BBN), with a target price of $3.70 (vs current price of $2.10).
The retailer of maternity and baby goods, targeting parents with children from newborn up to three years of age and parents-to-be, reported revenues of $254.9m, up 6.6% from the pcp in the last half.
Post-COVID, the nursery essentials – being the company’s core category – continue to grow strongly and were up 12.7% in the half.
Revenue is forecast to increase to $584m in FY24, and $639m in FY25. Meanwhile, EBITDA is expected to be $72m in FY24, and $82m in FY25.
Executive director, Lion Selection Group
Widdup, best known for his Mining Clock tool which tracks how close we are to the top of the cycle, declared it “ticked past midnight”.
Cash is now making 4% and outperforming the market, Widdup noted.
But the mining and metals boffin says there’s opportunities for investors who are liquid and can support explorers with stories they believe in.
“I speak for a fund which is holding mostly cash at the moment and that’s making 4%, so it’s outperforming the market,” Widdup said.
Having a decent amount of cash to play with is key – given juniors will have to raise cash at higher discounts to tick along, adding the risk of dilution for shareholders who can’t top up.
Widdup reckons Great Boulder Resources (ASX:GBR) might be worth a punt, with what looks like a quite prolific gold field down on its Western Limb and also east where initial exploration is finding gold at shallow levels.
“You could probably chuck a rock from their project and almost hit some of the nearest mills, they are that close,” Widdup says.
“You can have lunch in Meekatharra in the pub, one of the best chicken parmis in Australia I might add, and you can be on their project by the time the coffee you brought outside is still warm.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.