Market Optimism Peaks Ahead of the Holidays

• Commentary: Post US election pause, followed by a “Santa Rally”?... leading into 2025 small cap bull market? Which companies are expected to release material news in the next 6 weeks.
• Quick Takes: NTI, SLM, ONE, TG1
• This week in our Portfolios: MNB

The small end of the ASX market is still a bit unsure about what to do after the US election result.

It was a bit of a “quiet stalemate” again this week.

(AL3 didn’t get the memo and tested its yearly highs this week)

The world is still digesting what exactly the US election result will mean for the next four years.

The weeks after an election is often a “honeymoon phase”.

(or peak fear phase, depending on which candidate was preferred)

Big promises are made by the incoming administration.

Excitement and trepidation for change are in the air...

Markets start identifying which sectors and countries will be “winners” or losers” based on the guided policy changes.

... prompting plenty of knee-jerk reactions in many areas of global markets.

This is of course assuming that the proposed policy changes will actually be fully executed and in a timely fashion.

Ideas are easy.

Execution is hard.

Everyone has had a great idea at some point.

High fiving with friends about the new concept and how amazing it’s going to be.

This is the most fun part, when spirits are high.

Then Monday morning rolls around, the beer has long worn off...

and it's time to try and start executing - doing the thing.

This is where the roadblocks, pushbacks and stakeholder resistance first pops up.

And it gets hard.

Here is where most ideas are “put on the back burner”.

Some ideas do get traction, but are often “easier to achieve” watered down versions of the original vision that had everyone so excited.

The point is, we think the global markets are reacting to some big sweeping policy change IDEAS proposed by the incoming US administration.

But as time goes on the actual results will probably (broadly) just be a standard deviation away from the mean.

And just one or two key ideas will be substantially executed on.

Which will all become more clear over the next 12 months.

The “America First” proposal appears to be generally accepted so far.

The US dollar gained a lot of strength in the last two weeks.

A strong US dollar is good for Aussie listed companies selling their product into the US market for US dollars.

Think AL3, ONE, EIQ and WHK.

US based resource projects will likely benefit from US “localisation of supply chains” and “deregulation”.

Our companies like SS1, PFE, MAN, GTR and 88E.

Gold and silver have taken a breather since (in our view) the election result was comprehensive and the handover looks to be orderly.

But both are still trading well above their 10 year averages.

And we think the uncertainty around the global ramifications of the new US administration will see gold and silver continue their runs in 2025.

US equities also hit new records.

Risk is on (and has been for a while now) in the big end - we are just waiting for the small to catch up.

Last week we predicted that 2025 could be the year that small caps will finally get a bit of life back into them.

Are there any parallels between the current market and the huge bull market we saw in 2020-2021?

Obviously every small cap bull market is different, especially the combination of factors leading up to them.

But this week we took a look back at the lead up to the last bull market to remind ourselves of what happened.

Anyone who has been investing over the last few years will remember, back in 2020 after the COVID panic, the first stocks to start running were the gold & silver stocks.

Some gold & silver names multi-bagged off just rock chip samples.

(we haven't even seen this happening yet in the current precious metals run)

The ones that put out good drill results did even better.

And a few that made proper discoveries became billion dollar giants...

That precious metals rally was the main game in the markets for the second half of 2020.

Then later that year, early into 2021, just about every other industry and the market rallied across every other sector.

If you go back and have a look at any random small cap stock, if they were putting out good newsflow they were trading at all time highs.

Right now, we could be seeing something similar play out again.

For the last few months (starting around June), some of the precious metals names have rallied pretty hard.

We definitely saw it in our Portfolio:

• Mithril Resources (ASX:MTH) was the best-performing stock on the ASX in September - up ~362%.
• Sun Silver (ASX:SS1) touched an all time high of ~$1.18 - up 582% from our Initial Entry Price.
• Titan Minerals (ASX:TTM) hit new 52 week highs of ~63.5c.
• BPM Minerals (ASX:BPM) was up ~200% off the back of a new gold discovery at its project in WA.

(Kaiser Reef (ASX:KAU) has been the most recent addition to our Portfolio, and went from 15c to a high of 23c, now back to 17.5c)

Just like we saw back in that second half of 2020, gold and silver prices have been rallying too.

The question is, will the precious metals rally trigger a market wide bull market starting with a “Santa Rally”?

(Just like we saw back in 2020-2021)

We are hoping so...

We have been saying for a while that the small end of the market needs to deliver a few serious winners to attract capital back.

2023 stank for us - winners were few and far between.

(big thanks once again to LRS for carrying us through that tough year)

In 2024 so far we have had a couple of great results in SS1, MTH, AL3 and EIQ.

(SS1 and MTH thanks to the precious metals run as discussed above).

A few winners are making us feel a lot more positive about the markets in general.

Fear is slowly receding...

Our confidence is a bit higher.

It suddenly feels easier to put bigger $ amounts into new placements.

FOMO on new investments is stronger.

We are sure that some others in the markets have had a similar experience and are feeling the same way.

The more stocks that go up across the market, the more people will become more positive.

And the risk-on mood will finally be back.

Will 2025 be the year that we are finally back on?

The question for the next few weeks is...

Will there be a “Santa Rally”?

For anyone new to the markets, a Santa Rally is when stocks move up quickly heading into the Christmas period.

Being in the markets for 20+ years, we have seen a fair few “Santa Rallies” play out.

Usually, the companies that perform the best are the ones that put out the most material news during that period.

That being said, here are the companies in our Portfolio that have guided the market to expect material news before Christmas:

Companies expected to announce material news in the next 6 weeks

(in no particular order)

Oneview Healthcare (ASX:ONE)

We hope for a big deal from ONE’s partnership with Baxter ($25BN market capped healthcare supplier, that is the biggest hospital bed supplier in the US). We covered ONE’s latest progress in this note.

Sun Silver (ASX:SS1)

SS1 keeps hitting more silver so we expect more assays at its project in Nevada. Read our latest SS1 note.

Condor Energy (ASX:CND)

Prospective resource estimates for the company’s large oil and gas project in Peru. Read our latest CND note here.

BPM Minerals (ASX:BPM)
~2,000m RC drill program to follow up the company’s gold discovery in WA. Find out what we’re looking for in our latest BPM note.

AML3D (ASX:AL3)

We’re hoping for a big contract win for US Navy parts or one of the company's other partners like Boeing.

AL3 said in its AGM Presentation that it has a pipeline of US$7.42M of revenue in its existing order book for FY25. Read our latest AL3 note here.

EchoIQ (ASX:EIQ)

EIQ said in its latest webinar that it is in discussions with the Mayo Clinic, a prestigious US hospital network.

So we’re looking for early commercialisation deals for its AI heart disease detection software. EIQ recently received FDA clearance - read about what that means for the company here.

Pantera Minerals (ASX:PFE)

Result from the well re-entry that PFE kicked off last week - PFE said analytical results are due before the end of the year. Check out our note on that lithium well re-entry program here.

Kaiser Reef (ASX:KAU)

In the KAU quarterly, KAU flagged imminent exploration drilling at the A1 Mine’s “Nova Zone” which the company says has the best ore, which has never been mined before. Read our initiation note.

Techgen Metals (ASX:TG1)

TG1 recently started geophysical surveys at its promising multi-metal Blue Devil project - once geophysics is complete it will release the results of that program. Read our Quick Take.

Lycaon Resources (ASX:LYN)

The latest LYN quarterly said drilling was meant to start early November - we’re waiting for an update on drilling commencing. Read our latest LYN note.

Minbos Resources (ASX:MNB)

Funding secured and construction started at the company’s phosphate project in Angola. Read our note on MNB’s funding for construction here.

Inoviq (ASX:IIQ)

|IIQ said in its latest quarterly that its ovarian cancer test results are due in December, which we hope show that the company’s test is highly accurate at detecting one of the most deadly cancers there is.

This is using IIQ’s exosome technology - learn more about exosomes in our initial note on IIQ.

Titan Minerals (ASX:TTM)

Big gold (and hopefully silver) hits from the company’s current drill program at its Dynasty Project where there is already a 3.1M ounces of gold and 22M ounces of silver JORC resource. Read our latest note on TTMs current 10,000m drilling program.

Global Uranium and Enrichment (ASX:GUE)

In early September GUE flagged that a scoping study is due in the “coming months” - hopefully that comes in before Christmas with some good numbers for GUE’s ~52Mlb uranium project, OR any positive update on GUE’s enrichment tech. Read our latest note here.

Genmin (ASX:GEN)

The latest GEN quarterly report flagged that we can expect a project financing update “by the end of the year”. Read our latest note on GEN here.

Pursuit Minerals (ASX: PUR)

In PUR’s latest quarterly report the company said it is “targeting a material resource upgrade in the 2nd half of the 2024 calendar year” after its latest drilling for lithium in Argentina. Read our latest PUR note here.

Other bits of news we noticed this week:

Galileo Mining (ASX:GAL)
Kicked off another 5,000m aircore drill program earlier this week. A few days after drilling began GAL also put out an updated investor presentation.

Mithril Resources (ASX:MTH)
Presented at an invite only precious metals summit in Zurich, Switzerland. Check out that presentation here.

AML3D (ASX:AL3)
Had its AGM this week. Normally these AGM’s are just a formality but we always appreciate the commentary from the management teams in these decks. Check out the chairman & managing director’s commentary here.

Elixir Energy (ASX:EXR)
Presented at the Noosa mining conference. Check out that presentation here.

OneView Healthcare (ASX:ONE)
Put out an updated investor presentation. Check out that presentation here.

Sun Silver (ASX:SS1)
Picked up more ground expanding its project area by 34%.

Vulcan Energy Resources (ASX:VUL)
Received €100m funding from German Federal Ministry of Economics and Climate Protection.

GTI Energy (ASX: GTR)

Put out an activity update which gives a decent overview of what to expect from GTR between now and the end of the year.

Tyranna Resources (ASX:TYX)
Finished an 11-hole drill program at its lithium project in Angola.

Neurotech International (ASX:NTI)

Put out more genomic analysis results for its NTI 164 product.

What we wrote about this week

Minbos Resources (ASX:MNB)

The US$10M subscription agreement has finally been signed.

$46M capped Minbos Resources (ASX:MNB)’s phosphate mine is forecast to deliver a ~US$55M in EBITDA per year (base case, on average) mine, over a 20 year mine life.

The market has been waiting to see if MNB can get the funds secured to finish the build.

Delays in the funding and MNB running low on cash has seen MNB’s share price get beaten down to sub 5c...

On Thursday MNB announced final investment documents have been signed for the US$10M investment by the Angolan Sovereign Wealth Fund.

Read: MNB: US$10M subscription agreement signed - mine construction to commence

Quick Takes 🗣️

NTI in the news for Rett Syndrome treatment, new CEO to come

SLM encounters significant copper mineralisation

ONE seals $20M raise, $2M SPP to come

TG1 commences its maiden geophysics program

Macro News - What we are reading & listening to 📰

Battery Materials:

Sweden's Northvolt Hit by Politicians' Cooling Green Ambitions (Bloomberg)

• Sweden initially celebrated Northvolt as a green industry leader, with politicians highlighting its role in the climate transition and green growth.
• As Northvolt faces financial challenges, Swedish officials have avoided direct bailouts, reflecting a historical reluctance to rescue private companies with taxpayer funds.

Copper:

Regal Funds-backed True North Copper in $60m equity recap (AFR)

• True North Copper plans to raise $50-60 million through Canaccord Genuity and Morgans to exit voluntary administration and recapitalize.
• Key lenders Nebari Holdings and Perilya Ltd have agreed to revised terms, clearing the way for True North to resume ASX trading and appoint a new board.

USA Battery Materials:

Trump Plans to Dismantle Biden's Climate Law. It Won’t Be Easy (Bloomberg)

• Trump’s return may bring targeted cuts to the Inflation Reduction Act (IRA), potentially limiting tax credits and imposing new restrictions while avoiding a full repeal.
• Republican-backed changes to the IRA could reduce spending on clean energy projects, helping to offset costs for Trump’s planned tax cut extensions.

What we are watching:

Can a BRICS Currency Replace the US Dollar?

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Have a great weekend,

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