Brokers look for next big thing in WA gold as cash flows to developers

Australian mining analysts are beginning to look to the next crop of gold producers
Gold prices sit at record highs, as developers and miners race to capitalise
Ravensthorpe gold project owner Medallion Metals gets 55c price target as Canaccord slaps spec buy rating on developer

Aussie mining analysts are looking for the next big thing as capital flows from the cashed-up producers at the top of the gold game to the developers and small cap stocks below them on the food chain.

The latest example comes out of Canaccord Genuity and Perth gold expert Tim McCormack, who yesterday placed a spec buy label and 55c per share price target on Medallion Metals (ASX:MM8).

Medallion is part of a new breed of potential gold producers in Western Australia, and among the best placed to follow this year’s crop of emerging junior gold miners Black Cat Syndicate (ASX:BC8) and Meeka Metals (ASX:MEK) into producer status.

A bankable feasibility study is due on Medallion’s Ravensthorpe gold project, located on WA’s South Coast, in the September quarter, with a final investment decision to come in the December quarter.

But ahead of that, McCormack has released modelling looking at what the operation could look like, using the Forrestania mill MM8 plans to acquire from IGO (ASX:IGO) as its key processing infrastructure.

According to Canaccord, a 500,000tpa operation could average 60,000ozpa of gold production per annum (64,000ozpa gold equivalent once copper by products are taken into account), at an all-in sustaining cost of $1971/oz over a 5.5-year mine life.

To put that into context, spot gold prices are flying at the moment, lifting 20% already this year to US$3100/oz (+$4900/oz) as global economic uncertainty hovers. (And all the while, banks and brokers are ratcheting up their forecasts – read: Bad vibes good for gold as banks scramble to keep up with the flying metal.)

Costing just $75m to bring into production, McCormack, along with associate analysts Tyson Kestel and Parker Robinson, is assuming a 50/50 blend of debt and equity financing will be used to fund the development, with 13 indicative offtake proposals already submitted for MM8’s gold and copper concentrate, with seven containing development funding offers up to $50m.

Spot gold rush

Medallion would be one of a handful of new WA gold producers of real weight to emerge in the coming years with its own milling infrastructure, assuming it can complete a deal with battery metals producer IGO.

IGO shuttered its tired Forrestania nickel mines, acquired in a top of the market deal for Western Areas just two years earlier, in 2024.

Not long after MM8 entered an exclusive due diligence period to investigate the potential to purchase its Cosmic Boy plant to process ore from Ravensthorpe, 180km to the south.

Forrestania’s Cosmic Boy mill already has the flotation circuit required to treat the sulphide ores at Ravensthorpe, meaning Medallion could dramatically cut capex by retooling the nickel plant as a gold plant rather than construct a new one from scratch.

“The proposed consideration is to be capped at A$50m, comprised of upfront cash up to a maximum of A$15m, the assumption of rehabilitation liabilities (estimated at A$25-35m) and deferred cash consideration (if any),” McCormack, Kestel and Robinson added in their initiation note.

“With estimated pre-production capital of A$75m, the combination of the KMC and established Forrestania infrastructure presents a compelling opportunity to achieve a low capital, low risk and rapid pathway to production and cash flow.”

They believe there’s more upside on the table.

Medallion could demonstrate upside by increasing throughput above the plant’s 600,000tpa namplate or expanding its resource, with an update to the current inventory of 1.46Moz at 2.5g/t due in the first half of this year. It also opens the opportunity to unlock stranded gold deposits near Forrestania that never had a logical home.

“Forrestania is positioned to operate in a potential hub & spoke model, with MM8 currently lodging applications for Parker Dome tenements ~50-100km north of the plant,” McCormack, Kestel and Robinson said.

“Situated on the Archean Forrestania Greenstone belt, this presents potential brownfields growth alongside inorganic growth opportunities within the broader Forrestania region.”

Then there are resource growth opportunities at the Kundip Mining Centre, a 2.5km system that CG’s analysts say has “exceptional potential for extensions at depth” and for parallel repeat structures.

Much of the drilling that has been undertaken in the past couple years has been constrained to infill with mining studies the name of the game.

But a standout drill hit yesterday that returned stellar gold and copper grades of 20.2g/t and 5% copper from 139.2m, 80m outside the current mineral resource, demonstrated MM8’s potential to find new, high-grade mineralisation, and sent its shares over 10% higher.

The deepest hole at Kundip runs to just 420m, with an average drill intersection depth of only 100m below surface.

How is the market responding to junior gold stocks?

Canaccord’s rating looks even more bullish at spot gold prices, which if maintained would push MM8’s price target to 62c.

For reference, MM8 last raised cash at just 10c in February and at 26c yesterday was already sitting on a 112.5% YTD gain for a market cap of $121m.

That measures up with some of the other ASX gold developers in WA, with Meeka Metals (ASX:MEK) up 94% so far in 2025 as it looks to bring the Murchison gold project back to life eight years after Doray Minerals suspended mining and processing at its Andy Well gold mine.

It has a market cap of close to $400m.

Argonaut said in a note yesterday that Meeka, which it gives a spec buy rating and 22c price target, is on track to deliver first gold in Q1 FY26.

MEK was up 3.3% yesterday to 16c.

Black Cat Syndicate, meanwhile, has a market cap of ~$650m and is sitting on a ~70% YTD gain.

It restarted the once Northern Star Resources (ASX:NST) owned Paulsens mine in February, and has also purchased the Lakewood Mill for $85m from Westgold Resources (ASX:WGX) to provide a long-term processing pathway for its Kal East gold project.

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