Record gold price signals boom time for micro caps

• Gold, as you’d expect, was a big focus at this year’s Resources Rising Stars on the Gold Coast
• The day after the conference wrap, spot gold price hover near all-time highs at US$3641
• ASX All Ords Gold index up 69pc for the year to date; ASX Small Ordinaries gaining momentum, up 19pc YTD

As with any commodity upturn, the all-time high price of gold has changed the paradigm around which gold deposits are worth exploiting, opening up fresh opportunities and re-framing brownfield projects.

The shift in investor and market sentiment has unlocked new value propositions, allowing small-cap companies to carve out their own niche in the gold production industry.

“As (mining industry veterans) Bill Beament and Pierre Lassonde say, the best place to find gold is under old gold mines, right?” Javelin Minerals executive chair Brett Mitchell told Stockhead at the Resources Rising Stars Conference.

“That’s why we bought Eureka. Even though it’s small, that’s OK because we’re a micro-cap company.”

Locking in a mega deal

Javelin Minerals (ASX:JAV) currently holds a market cap of about $18.7 million at time of writing, trading at .03 cents per share.

In December last year JAV purchased the Eureka gold project from Delta Lithium (ASX:DLI) for $3 million in cash and shares, plus a $1 million deferred share consideration.

This week, JAV inked a deal with MEGA Resources to the tune of $25 million to develop Eureka.

“The MEGA deal is completely transformational for our business and the company and for shareholders,” Mitchell said.

“(MEGA’s) ability to provide a fully integrated mining and financing solution will enable Javelin to advance towards production in the most time efficient and co-ordinated manner.

“There’s $75 to $80 million of profit there, which means $40 million to Javelin.

“For a company of our size, to say we’re going to have $40 million cash in the bank in the middle of 2027… junior explorers and brownfield developers just don’t usually achieve that.”

In fact, MEGA likes the Eureka deposit so much, they bought $1 million JAV shares as a cornerstone investor of a recent $4.5m capital raise.

MEGA is a subsidiary of major Indian mining group BGR Mining and Infra, a big player in the field with an order book exceeding $18 billion.

Javelin isn’t the only Australian gold micro-cap drawing attention from big backing – WA-based BML Ventures has developed a business model around maximising profits from small to medium mining ventures, a pathway that’s only becoming more viable as gold prices hover at all-time highs.

Cashing in on overlooked deposits

BML Ventures is actively invested in several smaller deposits, teaming up with their respective operating companies to develop them to production.

BML joined hands with Auric Mining (ASX:AWJ) at the Jeffreys Find deposit and Kingswest Resources (before it was acquired by Brightstar Resources (ASX:BTR)) at the Selkirk deposit.

Auric produced a total of 30,000 ounces of gold at Jeffreys Find, raking in $29 million in total profit – they’ll be splitting that about 50:50 with BML.

AWJ purchased Jeffreys Find in 2020, rapidly developing it to production by early 2023 and pouring first gold by July that year.

Auric wrapped up mining by July 2025, banking about $17 million in total by the time the operation wound down completely, funding the company is already channelling into its next project, the Munda Gold Mine.

At Selkirk, BML and Brightstar mined a total of just over 8,000 ounces of gold, pouring about 430.7kg of gold doré and generating total revenue of $24.9 million, more than double the total JV costs.

BML also just wrapped up an operation with Resources & Energy Group (ASX:REZ) that saw the duo mine more 100,000 tonnes of ore at the Granny Venn project.

MEGA, too, has been taking it’s pick of the gold juniors, singling out Legacy Iron Ore’s (ASX:LCY) Mt Celia gold project as another point of interest, where the company expects to mine about 312,600 ounces of gold.

Rapid development, outsized pay-off

The advantage of many of these smaller, discreet gold deposits is that they can be brought online in a relatively short amount of time.

JAV completed the purchase of Eureka just 10 months ago, but the company is gearing up to begin mining by the second quarter of next calendar year.

“(Eureka) is an old open pit with a gold resource in the bottom on a mining licence just 54km north of Kalgoorlie,” Mitchell said.

“You couldn’t get a more ideal existing resource. We think there’s about 40,000 ounces of recoverable gold – that’s $220 million dollars’ worth.

“We also want to do a proper drilling campaign underneath the Eureka pit because we know that the gold zone comes up to surface at the southern end, and beneath the pit it opens up both at depth and along strike.”

JAV’s drilling ambitions are well within reach now they’re cashed-up with MEGA funding, set to receive a $250,000 advance payment every month from the mining big shot (once ore processing begins) as pre-payment of initial project revenues.

Once Eureka is in good shape, Javelin is planning to turn its attention to a second brownfield’s opportunity just a stone’s throw away at the Coogee gold-copper project.

Like Eureka, Coogee already holds a JORC resource of 126,685 ounces of gold – JAV has engaged mining services provider Topdrill in a drill-for-equity agreement to cover the first phase of resource development drilling there.

“(Exploiting micro deposits) just makes commercial and economic sense in the context of the Australian gold price,” Mitchell said.

With well-respected market analysts like Hedley Widdup signalling the beginning of the next mining boom cycle is right on our doorstep, the timing couldn’t be better for gold micro caps.

At Stockhead, we tell it like it is. While Javelin Minerals and Brightstar Resources are Stockhead advertisers, they did not sponsor this article.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.