Record gold prices are the ‘rising tide’ that may rerate junior explorers

Gold prices now above the US$2900/oz mark due to market uncertainty
Prices expected to remain elevated for some time due to record high demand for physical gold
Capital is already becoming more available and more corporate activity is expected

Gold bulls are continuing their stampede with spot prices now ticking above the US$2900/oz mark as investors flock to the safe haven asset away from ongoing market uncertainty.

There are also signs that these elevated prices are here to stay for some time with respected Australian gold watcher Lion Selection Group chief executive officer Hedley Widdup telling our own Josh Chiat in early February 2025 that the current gold price trend is “not a flash in the pan” in the wake of World Gold Council figures showing a record high in physical gold demand.

Major gold producers have already seen gains with Northern Star Resources (ASX:NST), which is in the process of acquiring Hemi-owner De Grey Mining (ASX:DEG) on a decidedly upward trend since the beginning of this year while the world’s largest gold producer Newmont Corporation (ASX:NEM) is also putting the pounds back on after a steep drop in late October 2024 when earnings came in below expectations.

Their mid-cap peers have also been rising steadily with Gold Road Resources (ASX:GOR) up 25% since the beginning of this year while Genesis Minerals (ASX:GMD) rose more than 27% during the same period.

None of this is unexpected, but the question on everyone’s mind is whether the dollars flowing into the gold sector will trickle down to junior explorers.

Explorers entering the frame

“A rising tide lifts all boats,” Koonenberry Gold (ASX:KNB) managing director Dan Power told Stockhead in relation to the flow of capital to the sector.

He said money from investors will first flow into producers then emerging producers before benefitting explorers with good gold projects and then anyone who can spell gold.

This he says was reflected in previous commodity booms such as when lithium could do no wrong in 2022.

“If you said you have a pegmatite with lithium, your share price doubled or tripled, and you didn’t even have to actually have anything or even a laboratory result,” he added.

Power also expressed his belief that the big gains are still around the corner saying that the market looks like it is only just getting started.

“Have people missed the boat? I doubt it very much,” he noted.

New Age Exploration (ASX:NAE) executive director Joshua Wellisch agrees saying: “I think you are going to see a lot of people park capital into gold as we move forward over the next six months.”

He added that operators in tier 1 regions such as the Pilbara or around Kalgoorlie were more likely to get credit when they drill up ounces.

“I think we are just at the start line and will start seeing some of those juniors really getting good traction in the market and that will get the broader market excited,” he said.

There’s certainly some evidence that attention is starting to turn towards junior explorers.

In the week of February 10 alone, juniors made up the bulk of the biggest resource gainers on the ASX with standouts such as Askari Metals (ASX:AS2) which increased resources at its Burracoppin project by 28% to 82,700oz of contained gold while Godolphin Resources (ASX:GRL) soared after delivering drill hits such as 49.6m at 3.53g/t gold equivalent from 210m from its Lewis Ponds project.

Corporate activity to rise?

High commodity prices also tend to be accompanied by a corresponding increase in merger and acquisition activity and there has been noted uptick in the past year.

Topping the list is Northern Star’s aforementioned $5bn takeover offer for De Grey, which ranks as the largest-ever acquisition of an undeveloped gold project – the 13.6Moz Mallina project headlined by the giant, play-opening Hemi deposit.

While dwarfed by Newmont’s acquisition of Newcrest in late 2023, the Northern Star move is notable as it will have to develop Hemi (and the broader Mallina project) from scratch other than work DEG had already carried out during the DFS process.

Strong gold pricing certainly plays a role as NST’s managing director Stuart Tonkin pointed out the company had used conservative gold prices in its assessment and that Hemi will be at the lowest cost quartile.

And more deals are likely to follow.

Argonaut Securities recently flagged that the high gold prices have enabled gold producers to generate strong free cash flow that has in turn built up cash balances.

It noted that be the end of June 2025, companies such as Ramelius Resources (ASX:RMS), Vault Minerals (ASX:VAU) and Pantoro (ASX:PNR) will have increased their gross cash to 20-30% of their respective market caps.

Power pointed out that cash-rich miners would be hungry for more assets and as they mostly haven’t been doing exploration, they would be on the lookout for exploration assets, which would be a valuation driver for juniors.

“M&A activity has been smart so far, there have been district or camp-scale consolidation and no one has really paid big premiums to the market pricing,” he said.

“De Grey was a big buy but it wasn’t massively over how the market was valuing it. There are not too many >10Moz deposits out there ready to dig.”

He also notes that the ability to raise capital has been improving as there are “more eyeballs on the sector and people are recognising that the sector is probably undervalued”.

Juniors in the spotlight

No look at the impact of gold prices on junior explorers will be complete without a peek at some of the companies operating in the space.

Koonenberry Gold (ASX:KNB) is focused on exploring its Enmore project in the highly prospective Lachlan Fold Belt.

It recently kicked off maiden drilling to test the Sunnyside prospect where historical drilling had returned results such as 174m at 1.83g/t gold including 3m at 8.86g/t from 172m to end of hole.

“The historical drill hits there are exceptional and it is open in just about every direction,” Power told Stockhead.

“I think if we can replicate those historical drill hits then improve them because the holes ended in mineralisation, we are going to be drilling deeper, the market is going to be impressed.”

Meanwhile, New Age Exploration (ASX:NAE) is looking to follow in De Grey’s footsteps and has made some promising – if still early – progress with aircore drilling returning results of up to 4m at 2.5g/t gold from 48m at its Wagyu project.

After wrapping up an Aboriginal cultural heritage survey earlier this year, the company is now gearing up to start deeper reverse circulation drilling that will unlock more of the project’s secrets and refine its exploration model.

Wellisch notes that the aircore program was never intended to find ore-grade intersections but rather to just confirm if gold is present, which was the case for all four targets tested.

“To say that we are excited is an understatement. We had the benefit of hindsight from the way De Grey went,” he said.

“They had to go 15 years and drill 200,000m and work out the best geophysical techniques to located it and we were able to take all that intel and did it all in months.

“They have paved the way in terms of understanding the techniques, which combined gravity with magnetics.”

Felix Gold (ASX:FXG) may be focused more on the antimony potential of its Treasure Creek project in Alaska, but that doesn’t detract from its significant gold potential either.

Recent trenching at the NW Array area returned a top result of 3m grading >35% antimony, which was limited by the laboratory’s detection equipment, and a not insignificant 5.29g/t gold.

Should further exploration confirm this prospectivity, the gold will still remain a valuable co-product.

It is not the only project in the company’s portfolio either with an auger program at the NE Fairbanks project uncovering what the company considered to be exceptional anomalies next to more than 33.6Moz of combined resources held by major regional players.

OzAurum Resources (ASX:OZM) has stormed the markets after shallow aircore drilling alonng the Relief Shear at its Mulgabbie North gold project returned thick gold hits with high-grade intersections including 20m at 3.57g/t from surface and 10m at 6.59g/t from 12m.

Those strikes are located around historical intercepts that were drilled but never followed up, with RC drilling last conducted over 38 years ago.

More recently, aircore drilling returned consistent high-grade gold mineralisation at the newly mapped New Cross Fault target with results of up to 16m at 3.21g/t including 4m at 10.22g/t.

OzAurum is currently carrying out a heap leach feasibility study to consider the potential for a trial pit and heap leach operation to bring the project into near-term production and deliver early cash flow.

Mt Malcolm Mines (ASX:M2M) , which has produced 218oz of gold doré from processing of 812 wet metric tonnes of high-grade material that was recovered through the now completed bulk sampling at its Golden Crown prospect.

The successful program validates the effectiveness of wet gravity recovery for the coarse nature of Golden Crown mineralisation.

It is now looking to complete the ongoing processing of gravity recovered gold, plan drill programs incorporating insights gained from the bulk sampling, evaluate monetisation options for stockpiled materials and advance resource estimations.

Further down the street is Ora Banda (ASX:OBM), which is progressing its Drive to 150 project that will deliver annual production of 140,000-160,000oz gold from FY2026 from Riverina Underground and Sand King underground mine, which is part of its Davyhurst project.

Underground diamond drilling for grade control is also underway and to date has confirmed multiple discrete high-grade lodes and additional bulk tonnage opportunities.

Recent deep drilling has raised the potential to extend mine life at Riverina Underground by several years after confirming the continuity of high-grade gold mineralisation over 300m below the current mine plan.

Drilling at Riverina is about 50% complete and is continuing with two surface and two underground diamond rigs dedicated to resource extension and definition drilling.

Also on the bigger end of town is Spartan Resources (ASX:SPR), one of the big turnaround stories on the ASX.

In its former guise as Gascoyne Resources, the company produced over 70,000oz of gold in FY2022 from its Dalgaranga project in WA before its continued struggles with grade and margins forced the plant to be placed on care and maintenance.

Rather than give up, the company carried out some rather fortuitous exploration that resulted in the discovery of the high-grade Never Never deposit and placed it on an upward trajectory since then.

In late January, Spartan kicked off a major ~85,000m surface and underground to both increase confidence in its existing 2.87Moz resource and to add more ounces.

At Stockhead we tell it like it is. While Felix Gold, Koonenberry Gold, New Age Exploration, OzAurum Resources, Mt Malcolm Mines, Ora Banda Mining and Spartan Resources are Stockhead advertisers, they did not sponsor this article.