Is the Small Caps Bull Market Back? And is it here to Stay?

Commentary: Bull market back? Defence metals leading the charge, precious metals strong too. US projects are in. RML running. Other US projects we are Invested in. What happened with the ILA result?

Life has come back to ASX microcaps.

We predicted that it would be the running gold price and gold M&A that would eventually trickle punting dollars back into small stocks...

Then suddenly USA defence metals came steaming in over the top and delivered some early 2020 style price runs on the ASX small end, on huge volumes.

That's certainly fine with us, we’ll take it.

(“defence metals” are critical in military supply chains, and the USA is throwing presidential narrative, executive orders and money at rapidly onshoring their supplies)

The gold and silver thematic is still bubbling along very nicely too.

Silver broke into new 13 year highs last Friday and spent most of the last week above the US$36 per oz “triple top breakout” price we wrote about last Saturday.

Gold is also knocking on the door of a new all time high - kicked up yesterday by the Israel strike on Iran.

So we have a couple of emerging macro themes working in tandem now - defence metals, gold and silver...

and we like the global attention on USA based metals projects.

On Wednesday we added a new Investment Resolution Minerals (ASX:RML) that fits into all of these themes.

RML is acquiring a defence metals (antimony and tungsten), gold and silver project located in Idaho, USA.

RML’s project sits directly next door to the $2BN capped, NASDAQ listed, Perpetua Resources.

Perpetua recently received fast track mine permitting directly from the US federal government due to the “strategic importance” of its giant 6Moz gold, 8Moz silver and 200M pounds of defence metal antimony project.

(fast track permit was granted for the strategic importance of the antimony)

The night after we added RML to our Portfolio, next door neighbor Perpetua announced a US$400M financing towards its overall financing package to build its mine (Source)

Then the next night Perpetua announced that due to “excess demand” it was upsizing the capital raise (Source).

(in between all this, RML announced a US OTC listing under code is RLMLF “due to a rise in demand and interest in the Company from North American investors “- Source)

It’s been a big 3 days for RML, the Perpetua funding and upsizing being announced on the two nights after we added RML to our Portfolio certainly helped.

(a nice bit of “small cap luck” that’s been missing since the last bull market finished)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

RML’s neighbor Perpetua plans to build the largest open pit gold mine in the US and become the only domestic source of antimony for the US Defence Industry.

RML reckons their project is an Intrusion-Related Gold System (or IRGS) and that the geological model is directly comparable to Perpetua’s Stibnite Gold & Antimony Project:

If this is the case, then we hope that RML is able to build up its own multi-million ounce gold-antimony resource on its project.

A lot of drilling is needed to test this theory, which according to the RML investor preso will be starting in August...

(click here to see the RML investor presentation)

And with a lot of US government and US capital markets interest in Perpetua’s strategic project next door, we hope some of that attention and capital rubs off on RML...

(with RML’s new US OTC listing where US based investors can trade RML shares under ticker RLMLF)

A lot still has to go right for RML, but just as it stands the company holds a position right next door to potentially the biggest gold and antimony mine in the USA.

So in summary, RML currently has:

• Ground directly next to $2BN Perpetua’s “strategically important” gold and antimony project
• On similar geology
• Historical production of antimony, gold and tungsten
• Drill ready antimony and gold targets
• 6,000m of drilling starting in the coming months

Our Big Bet is to see RML have some exploration success and define a gold + critical mineral JORC resource of its own.

Read our RML initiation note here

USA projects? Our other Investments with exposure to the US

We have a number of different Investments in the US...

Defence metals and precious metals gold and silver are currently taking centre stage in terms of attracting attention and capital from the markets.

(uranium is also looking like it wants to get involved)

Here is a list and quick summary of our US based investments:

1. Haranga Resources (ASX:HAR) - next week HAR is finalising the acquisition of its new US based, high grade gold project AND gold processing plant.

The project is 5.8km of an exceptionally high-grade part of a gold belt in the richest section of the famous “Mother Lode” belt in California.

The Mother Lode is known for its high grades and for being at the centre of the famous California Gold Rush.

The project comes with a 100% owned, built and permitted 350kta gold processing plant, and an 880m decline (the tunnel that goes underground to get to the gold), plus offices and a workshop.

Having an existing processing permit and constructed processing plant in a jurisdiction like California is a BIG deal... just ask KAU (and CYL) about the value of its permitted processing plant in Victoria).

Our bet is for HAR to (hopefully) discover some more high grade gold, mine it and monetise it while the gold price looks like it wants to break into new all time highs.

With the gold “Mother Lode” and “gold rush that built California” firmly baked into US lore and culture, we can see a scenario where the US mainstream starts to talk about this famous 1800s gold rush region and HAR is front and centre to take in the market interest...

Dateline Resources (another ASX company with a Californian gold asset) had a ~50x spike in its share price inside a 45 day period...

Dateline caught the market’s attention because the US government mentioned its project in relation to its rare earths history (Trump tweeted about it).

We think everything is setting up nicely for HAR over the coming months - We participated in the recent HAR placement (a significantly bigger than usual sized cheque for us).

Watch this space - we will provide another update very soon...

Here is our most recent HAR update on their new US high grade gold acquisition

2. Sun Silver (ASX:SS1) - has a 480M ounces silver equivalent JORC resource in Nevada, USA.

SS1 is the biggest pre-production silver asset on the ASX.

With the silver price rising by a few dollars to US$36 per oz over the last few weeks, with 480M oz silver equivalent it's no surprise SS1 has started a nice little run.

The “triple top breakout” in silver prices could trigger a fast run to US$50 per ounce (if the expert chartists are to be believed).

And with recent drill holes done by SS1 returning silver AND significant grades of defence metal antimony, SS1 reckons they could potentially have an antimony resource running through their entire silver deposit too.

To test this, SS1 need to re-assay the ~200 historical drill holes that make up their silver resource for antimony, because these holes were only ever assayed for gold and silver in the past.

Antimony prices are hitting new highs every month.

(more about SS1’s antimony potential in our December 2024 SS1 article)

Due to SS1’s size, scale and potential strategic antimony resource, SS1 could be one of the silver assets inside the US that garners mainstream attention.

Read our most recent note on SS1 here

3. James Bay Minerals (ASX:JBY) - owns a 1.37Moz gold project in Nevada, USA.

Gold was up ~3% on Friday afternoon after the news about Israel and Iran broke and looks like it might hit a new all time high next week.

If global uncertainty gets worse, the gold price could keep running and make JBY’s project more and more appealing from an economic perspective.

IF JBY keeps successfully drilling more extensions to their resource and the gold price goes high enough then JBY’s neighbour N.G.M could become increasingly interested in JBY’s gold right over its tenement border...

We visited JBY’s project in the USA last week (we were surprised just how close JBY’s project is to N.G.M’s giant, operating mine) - here is what we saw.

4. Global Uranium and Enrichment (ASX:GUE) & GTI Energy (ASX:GTR) - both own uranium assets in Wyoming, USA.

For every dollar rise in the uranium price, bringing old projects back online becomes more appealing. Wyoming is particularly interesting because of Cameco’s Smith Ranch facility (the biggest ISR uranium processing plant in the US) being on care and maintenance.

A sudden spike in uranium price and a push to get US domestic production up and running could light a fuse under all Wyoming uranium names... especially if that Cameco plant comes into play again.

1. Pantera Minerals (ASX:PFE) - owns a lithium brine asset in the Smackover region in Arkansas, USA.

This one is interesting because there is a precedent for US funding support in lithium names... think the US$1BN loan commitment for ASX listed Ioneer that closed earlier this year.

PFE’s project is in the heart of the Smackover region where the big petrochemical players are active ($730BN Exxon and $112BN Equinor). If these guys lead the way in the region and PFE gets some government funding/attention it could spark a rally in PFE’s share price. (especially with the depressed levels it's trading at right now).

6. AML3D (ASX:AL3) - sells 3D metal printing systems (a modernised manufacturing exposure).

This one is a bit of a wildcard.

We know that the US is looking to revitalise its manufacturing industry and one of the ways it's looking to do that is by modernising the underlying manufacturing processes.

AL3’s 3D printing systems are faster and more efficient relative to conventional manufacturing processes.

AL3 is already selling into the US to customers like the US Navy and Boeing...

AL3 just recently set up and expanded its US facilities.

The company also pulled off a mega capital raise for a company of its size (and had $31M cash in the bank at 31 March 2025) so the stage is set for big announcements

Read our latest AL3 note here

Our biotech ILA had big news out this week - so why did the market react like that?

Island Pharmaceuticals (ASX:ILA) published results from its anticipated Phase 2a/b clinical trial on its dengue fever drug this week..

“Results show that ISLA-101 demonstrated clinically meaningful anti-dengue activity, which included a material reduction in viral load and symptoms.”

Which sounds pretty good to us...

On the day that the results were announced the market initially bid up the stock, and it opened at 23 cents, ~10% higher than the previous day.

However the stock closed down for the day at 18 cents.

But why did the share price go down if the results looked positive?

Trial results are always a big catalyst for an early stage biotech company, and investors have been waiting a long time to see what they deliver...

But share prices CAN go down on good news, depending on a number of factors.

The main factor is: What were the market expectations going into the trial, and did the company meet those expectations? .

When good news is published, in a high expectation environment, the price can still fall.

We think that this is what happened with ILA.

A bit of background on ILA’s clinical trial

ILA conducted a Phase 2a/b clinical trial on dengue fever, to evaluate whether its drug could work as either a preventative AND/OR a treatment.

The goal of Phase 2a was to establish if its drug was effective as a preventative.

(take the pill when you are healthy but you are in a high risk dengue location)

The goal of Phase 2b was to establish if the drug was effective as a treatment.

(take the pill if you have already contracted dengue)

In November last year a report was published by the Safety Review Committee overseeing ILA’s Phase 2A trial which concluded:

(Source - ILA announcement 27th November 2024)

This means that the market already knew that ILA’s drug reduced the viral load of dengue fever AND reduced symptoms.

(and this was likely factored into the share price prior to this week’s news)

The unknown information was the results of the Phase 2b trial.

The positive results from Phase 2a set the bar high for ILA.

The announcement this week provided more information on the Phase 2a trial (additional to already known information).

ILA said that more analysis of the results would be needed to establish the results of the Phase 2b trial - we suspect the market didn’t want to wait and hence didn’t like it.

Was the Phase 2a/b trial as a combination a success?

We definitely think so.

But was the Phase 2b part of the trial a success?

Well, we don’t quite know yet...

Given the market is now likely going in with lowered expectations for the additional analysis of Phase 2b results, ILA could still surprise to the upside, if the further analysed data shows something good.

Especially given the share price has gone down a bit since last week...

That is the opportunity ahead for ILA.

Even still, we think that the data from the Phase 2a part of the trial, that shows ILA’s drug works as a preventative, is enough to carry it through to a larger clinical trial.

Here is how we think the market expectations reacted to the news:

We write about this in detail in our educational piece: Why do shares go down on good news?

At the end of the day the market expectations are all about potential risk and potential opportunities.

But from our perspective, the results of the combined Phase 2a/b trial has enough positive data in it to progress the drug through to a larger clinical trial.

Thats our take as “armchair scientists”, but lets hear what the experts think:

We will be tuning into the webinar with ILA’s CEO and MD Dr David Foster on Tuesday at 11AM AEST - hopefully he is able to answer any questions lingering on the minds of the market.

Register here:

https://us02web.zoom.us/webinar/register/WN_6kMFre8DSki7Mt60Sc56Eg#/registration

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Have a great weekend,

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