It is at the bottom of the ASX barrel that punters sometimes find some absolute gems that, with a little polishing, could truly shine. In this column, we examine companies with market caps around the $10m mark that may well be a bargain hunter’s fondest dream.

After a bit of hiatus following the market uncertainty, the Bargain Barrel returns with a junior explorer that has acquired two new projects and counts one of the world’s largest miners as one of its biggest backers.

Earlier this month, Alloy Resources (ASX:AYR) completed a $1m capital raising that included the placement of shares, carried out a 10-for-1 share consolidation, and completed the acquisition of Dingo Resources, which adds the Morgan Range and Bryah Basin projects to its portfolio.

The company will also count Rio Tinto (ASX:RIO) and Gateway Mining (ASX:GML) among its top shareholders thanks to the issuing of post-consolidation shares to the two companies as part of the consideration for acquiring the two projects.

Alloy has now exercised its right through Dingo to acquire Gateway’s interests in the Bryah Basin project, which is just 10km from where the Morck Well joint venture has drilled holes returning up to 10m at 3.55 grams per tonne (g/t) gold.


Executive chairman Andy Viner told Stockhead last week that the work carried out by Morck Well partners Sandfire Resources (ASX:SFR) and Auris Minerals (ASX:AUR) highlighted the value of the project.

“They are spending hundreds of thousands of dollars and that drilling is going to be coming closer to us over the next month,” he said.

The company will be required to pay Gateway $200,000 at completion of the Bryah Basin acquisition and a further $175,000 within 12 months of completion.

Gateway will also receive 20 million AYR shares that are subject to a 12-month escrow and a 1.5 per cent net smelter royalty.

“The Bryah Basin project is a unique large landholding, which has numerous early stage copper-gold targets right in the middle of Sandfire Resources exploration areas,” Viner said in Alloy’s announcement today.

“Our neighbours have confirmed that regional exploration drilling within similar geology along strike has located strong gold mineralisation, which can only mean the prospectivity of the project area is being enhanced.”

And that’s not all, Alloy is also acquiring the Morgan Range project near the West Musgrave JV between OZ Minerals (ASX:OZL) and Cassini Resources (ASX:CZI) from Rio for a total of $50,000 in cash and $200,000 in shares along with a 1.5 per cent royalty and a requirement to carry out at least 2,000m of drilling.

Morgan Range was once a priority target of Rio’s before the major decided to chase the Winu target in the Paterson, giving Alloy a low-risk, high-value target to focus on.

Rio is also a partner in the company’s existing Paterson JV project and is gearing up for a drilling program to test six targets.

Alloy’s final project, Horse Well, offers the potential for early cash flow with the company looking to carry out preliminary mining work, metallurgy and further analysis of drill samples.

Horse Well already features an inferred resource of 257,000 ounces of gold, about half of which is a shallow resource grading 2.7 grams per tonne (g/t) gold.

With potential for early cashflow, the entry of Rio onto its share register and a pipeline of work, Alloy is leveraged for growth in the event of any success.