WAU: A Positive Surprise...

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 28,145,810 WAU Shares and the company’s staff own 8,476,191 WAU Shares at the time of publishing this article. The Company has been engaged by WAU to share our commentary on the progress of our Investment in WAU over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

One of the unwritten (well, we are just about to write it), general rules of ASX small cap investing is:

“When drilling results are taking too long to be released, it means they are probably going to suck”.

IF it's been 2, 3 or 4 months since drilling started and the company has gone quiet - the market starts to make assumptions about the results - usually negative.

And the selling begins.

Then as the share price falls, it feeds confirmation bias and market participants think “look I was right... I should sell more”.

Sometimes, the selling starts for completely unrelated reasons - but the market believes what it wants to believe.

We think that’s what’s happened to our Investment WA Gold (ASX:WAU).

$22M capped WAU has a 518k ounce gold project in WA.

Four months ago they released a scoping study showing that for a low pre production capital requirement of $8M, WAU could deliver an NPV of A$205 – A$253 million (pre-tax). (source)

WAU’s assets sit in the famous WA “Northern Goldfields” gold region hosting many, multi-million ounce gold deposits:

(source)

The purpose of the drilling was targeting extensions at depth to its existing resource.

WAU’s working geological theory is that its project could host a Never Never style ductile gold system - where the grades of its resource get bigger as drilling goes deeper.

Never Never was the discovery Spartan Resources made in mid 2024 which led to a ~$2.5BN takeover by Ramelius Resources. (source)

WAU started drilling, took a long time to release results, the market got suss, and WAU got sold off from highs of 4.2c to 1.8c...

(the gold price breather during this time didn't help matters either)

BUT...

The drill results came out yesterday and they are... actually pretty good, gold hit in every hole.

(even generally accepted market rules don't always hold)

WAU also has assays pending from its other WA asset - but more on that later in today’s note.

So the 518k ounce gold resource estimate is still there and WAU has hit some possible extensions at depth:

(source)

All seven holes hit gold at (or very close to) the spot that WAU's geological model said it would be. (source)

One hole even clipped a 231m zone of altered rock - which WAU says indicates "a much larger and extensive gold system is potentially emerging" at the project.

AND WAU has already got a second round of drilling planned this quarter to extend the resource further AND lob a few geotech holes in so it can start development planning.

WAU wants to be in a position to make a Final Investment Decision on the project next year.

Remember - WAU's project has a scoping study showing a $205M to $253M pre-tax NPV from just $8M in pre production capital (we covered the study in detail in a previous note here)

So the drilling results didn’t suck...

The project still has its 518k ounce gold resource estimate...

It still has a scoping study showing a NPV of A$229M on just ~115k ounces of that 518koz resource estimate.

And WAU is already starting to think about making a “Final Investment Decision” to build the project.

Maybe for WAU the selling wasn’t even related to speculation around drilling?

Maybe a broader sell off in gold stocks started the sell down - perhaps the market took it for selling because of delayed results and ran with it.

Looking at WAU’s share price chart, it is tracking almost identical to gold:

It all sort of reminds us of the image below...

What happens next IF the gold price starts moving higher?

We think it could reverse that image above...

Especially right now with the gold chart looking like it has come to a point where it picks either up or down (we will explain why we think UP, later in today’s note)

(source)

While gold makes up its mind, here is a quick recap of why we like WAU's 518k ounce Abercromby project in the first place:

• Existing High-Grade Resource: The project has a 518k ounce gold resource estimate (JORC compliant).
  
• Expansion Potential: There is "blue sky" exploration upside, with WAU targeting a resource upgrade to over 1M ounces with more drilling.
  
• "Never Never" Discovery Potential: WAU’s working theory is that its project could host a high-grade, ductile gold structure similar to the "Never Never" discovery (Spartan Resources), which was taken out for ~$2.5BN.
  
• Toll Treatment Strategy: WAU has a non-binding MoU with a nearby mill (Wiluna Mining). This could allow for a low-capex, fast-track pathway to production without the need to build a $100M+ processing plant. (more on this in a second)
  
• Granted Mining Lease: Unlike many junior explorers, the core resource is already on granted Mining Leases, significantly reducing the regulatory timeline to start production.
  
• NPV of $205-253M pre tax: This NPV comes from just an initial $8M pre production capital requirement making it a much easier initial funding hurdle to overcome than most explorers/developers require.
  
• Tier 1 Location: Situated in the "Northern Goldfields" of Western Australia, it is surrounded by major mines and infrastructure owned by companies like Northern Star and Genesis Minerals.

(source)

A big reason we Invested in WAU was because we thought that when WAU’s potential toll-milling partner Wiluna Mining comes out of administration and lists on the ASX, it could bring interest back into the region (and potentially an acquisitive neighbour into this part of WA).

A few weeks ago we saw this news article from the Australian - Wiluna, the owner of the big mill ~15km away is getting close to a $400M listing back onto the ASX.

(source)

Wiluna is the same company WAU has a toll treatment deal in place with. (source)

And the same company whose board has been banging on about how a relisting and recapitalisation would let it focus on "growth initiatives and/or corporate transactions"...

(source)

...which tells us there could be deals happening once Wiluna’s back on the ASX.

We wrote about what a recapitalised Wiluna could mean for WAU back in March.

So our “region comes back alive” thesis might still play out for WAU.

All we need is for the gold price to start running again...

Another reason we Invested in WAU was for its project next door to $1.4BN Minerals 260

We think the 518k oz gold resource estimate at Abercromby, backfills a big chunk of WAU’s current $23M market cap.

Giving us a free kick at WAU’s other project next door to $1.4BN Minerals 260’s 4.5M ounce gold deposit.

In one of the hottest gold regions in WA - Minerals 260 has received backing from one of the world’s biggest gold royalty funds ($60BN Franco Nevada).

AND just a few weeks ago, $24BN Evolution Mining was rumoured to be taking a look at the company as a takeover target.

(source)

A few months ago Minerals 260 paid ~$7M for exploration ground in the region. (source)

That deal left our Investment WAU as the only company with 100% owned ground left in and around Minerals 260’s giant gold deposit.

WAU is now quite literally surrounded from all sides by the $1.4BN Minerals 260.

AND WAU just finished drilling 46 holes into its northern blocks (interpreted to be an extension of the trend that hosts Minerals 260's deposit).

Assay results could be announced any day now (WAU says early August). (source)

Here is the ground Minerals 260 acquired, and all the ground WAU holds in the region:

(source)

We think the WAU’s ground could be much more valuable than the ones Minerals 260 paid $7M for - especially because Minerals 260 itself is interpreting potential extensions to its ~4.5M ounce deposit.

In fact, Minerals 260’s announcement from the 16th of February 2026 returned more strong assays on that western border next to WAU AND showed the next few planned holes were edging ever closer to the boundary with WAU:

(source)

WAU’s ground next door has never been drilled before...

After everything that’s happened in the last few months we think WAU’s ground has become more valuable for three reasons:

1. WAU is the only remaining neighbour of significance
   
2. MI6's drilling is indicating potential extensions toward WAU’s ground.
   
3. MI6 may need WAU’s blocks to optimise its mine plan.

We are not mining engineers, but it feels like it would make sense for the owner of a multi-billion dollar 4.5M ounce gold deposit to own the ground surrounding that resource.

When you’re building an open-pit gold mine, a lot of space is needed for things like pit shells, waste dumps, infrastructure footprints and haul roads all need to be planned across a wide area.

(source)

Worst case scenario, WAU’s ground here is a “nice to have” for them.

Best case scenario for WAU is with some drilling, WAU finds gold and then it becomes a “must have” for Minerals 260.

Whatever happens, we think the market is currently placing very little value on this asset.

We think that a few good hits from this ground could bring a lot of market interest into WAU (mainly because there are already a lot of eyeballs watching the region).

And with the first assays from this ground due within weeks, we won't have to wait long to find out.

Or... again, maybe we just need the gold price to start moving higher so the market is willing to do DD on gold stocks again.

Speaking of gold prices - the chart feels like it wants to move

Anyone who follows the big media channels would have seen this over the last few days:

(source)(source)(source)

And this sneaky photo taken of US Treasury Secretary - Scott Bessent - at a US cabinet meeting where he has noted down to “Buy $5-10BN in Japanese Yen”:

(source)

Without going deep on macroeconomics - all of this relates to the US Treasury intervening in currency markets to prop up the Japanese Yen and prevent it from depreciating.

Here’s the short version:

US buying yen = US selling/printing dollars = weaker dollar + a signal that the US wants the US dollar weaker = gold's two favourite things at once.

The US Treasury is buying Japanese Yen to stop its devaluation and is signalling to the market it will do whatever it takes to stop the Yen decline.

Which could mean more USD gets printed and pumped into the system.

Which is bullish gold - more USD printing SHOULD mean gold does well.

We also read this article yesterday which explains how most G7 countries are spending more on interest repayments than they are their militaries.

Which means more printing (to pay interest on debts) and more debt needed to build out militiaries... the fiat currency death spiral.

(again, more of gold’s favourite things - debt and money printing)

(source)

Of course we could be wrong - markets work in mysterious ways and the opposite to what we think is always very possible (even likely).

Legendary “gold royalty” pioneer Pierre Lassonde reckons gold is going to US$17,250 per ounce - but hey, he is always bullish so assume he could be incorrect.

“I Could Not Be More Bullish”: Pierre Lassonde’s $17,250 Gold Target

Maybe the currency market intervention is the first of many similar catalysts to take it there?

Looking at the gold chart it does look like the price has come to a point where it picks either up or down - so who knows:

(source)

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.

In the short term the gold price will influence where WAU’s share price trades, but ultimately we are Invested in WAU to see it deliver our Big Bet as follows:

Our WAU Big Bet

“WAU re-rates to a market cap >$250M+ by: expanding its gold resource at Abercromby to exceed 1M+ ounces, by quickly entering production using a toll treatment model for its existing resources, OR making a discovery at its Bullabulling project.”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our WAU Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What we want to see next from WAU

Abercromby project - WAU’s 518K ounce gold JORC resource estimate

On this project, here are the milestones we are tracking:

• ✅ Phase 1 drilling at Abercromby
• ✅ Phase 1 assay results
• 🔄 Phase 2 drilling at Abercromby (~6,000m of diamond drilling)
• 🔲 Abercromby resource upgrade (WAU is targeting 1M+ ounces)
• 🔲 Maiden Ore Reserve + feasibility study workstreams
• 🔲 Binding toll treatment deal (converting the Wiluna MoU into something firm)
• 🔲 Final Investment Decision (targeted for 2027)

Bullabulling project (next door to $1.4BN Minerals 260)

Here are the milestones we are tracking for this project:

• 🔄 Bullabulling maiden drill program assays (46 holes completed, results due “early August”)
  
• 🔄 Sub-Audio Magnetics survey at Bullabulling (scheduled Q3)

What could go wrong?

The single biggest risk right now is “exploration risk”.

WAU still has assay results due from its Bullabulling project - there is no guarantee that drilling finds any economic mineralisation.

Exploration risk

WAU’s exploration upside is based on geological theories, specifically that the Abercromby resource hosts a "Never Never" style high-grade system at depth, and that the Minerals 260 deposit extends into WAU's Bullabulling ground. These theories have not yet been proven by WAU's own drilling. If upcoming drill programs fail to validate these models, the market could re-rate the stock lower.

Source: “What could go wrong” - WAU Investment Memo 03 Feb 2026

The second major risk is “commodity price risk”

WAU’s share price is somewhat correlated with gold prices. Any major moves lower in the gold price could re-rate WAU lower.

Commodity price risk

The performance of commodity stocks are often closely linked to the value of the underlying commodities they are seeking to extract. Gold prices are trading near all time highs, any volatility or sustained drop in gold prices could hurt WAU’s share price.

Source: “What could go wrong” - WAU Investment Memo 03 Feb 2026

Other risks

Like any early-stage gold exploration and development company, WAU carries significant risk, here we aim to identify a few more risks.

WAU’s low-capex processing strategy relies heavily on a non-binding MoU with Wiluna Mining. If Wiluna fails to successfully relist or decides not to execute a binding toll-treatment deal, WAU may have to raise significant capital to build its own processing plant.

Assay results for the 46 holes drilled at Bullabulling are due shortly, but there is no guarantee they will yield economic gold grades. If these results disappoint, the market may write off the potential extensions from the neighbouring deposit.

Advancing Phase 2 drilling and completing feasibility studies will require ongoing cash. WAU may need to raise additional capital in the future, which could result in share dilution for existing holders.

The optimistic scoping study economics for Abercromby rely on early metallurgical and cost assumptions. Further detailed engineering and feasibility studies could reveal higher operational or capital costs than currently estimated.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our WAU Investment Memo

You can read our WAU Investment Memo here.

We use this memo to track the progress of all our Investments over time.

Our WAU Investment Memo covers:

• What does WAU do?
• The macro theme for WAU
• Our WAU Big Bet
• What we want to see WAU achieve
• Why we are Invested in WAU
• The key risks to our Investment Thesis
• Our Investment Plan