It’s risk-on as strong commodity prices drive record crowds at resources investor conference

The broader market has shifted its mood from a risk-off to a risk-on stance on the prospect of US rate cuts and the stabilisation of the AI thematic.

While the mood was risk-off for the last couple of weeks, the mining sector got caught in the downdraft.

But thanks to a commodities market that is as cohesive to the upside as could be hoped for, the mining sector can be expected to rally harder than the broader market.

What’s not to like about near-record gold and silver prices, iron ore holding above $US100/t, the end of the lithium rout, copper at near record levels and zinc marching to 11-month highs in response to the same supply fears pushing its red metal cousin along?

Anecdotal evidence from trading desks suggests that mining investors are back in the market after sitting on the sidelines for most of November.

More evidence for an extra strong Santa rally for the mining sector is likely to be on display next week at the Resources Rising Stars conferences at respective Sofitels in Sydney on Tuesday and Melbourne on Thursday.

Twenty-eight companies are lined up for presentations ranging from the $7.7 billion Genesis gold powerhouse down to a bunch of juniors with sub-$50 million market caps.

Genesis will no doubt have a good story to tell from the company with a long history of over delivery in an industry when the opposite is often the case.

But today’s interest is in the sub-$50 million sector, particularly those with active – and funded - exploration programs underway with the potential to make a (leveraged) difference.

The idea there is that with investors in a risk-on state of mind and commodity markets holding at higher levels, the search will be on at the conference for the next big thing in the discovery space.

The expected record attendance suggests that will be the case.

CZR Resources’ (ASX:CZR) managing director Stefan Murphy can expect a good hearing. CZR doesn’t actually fit the sub-$50m market cap focus with its market cap of $87m at 36.5c a share.

But the Mark Creasy-backed company is holding more than $70m in cash after the sale of its iron ore project to the Rio Tinto-led Robe River joint venture.

So think of it as a $17m company until it decides what amount should be returned to shareholders and focus on its leverage to exploration upside at its Croydon gold project in the Pilbara.

The drilling program has just kicked off and is looking for the same intrusion-related gold that De Grey (now owned by Northern Star) found at the 11.2Moz Hemi project, 50km from Croydon.

E79 Gold’s (ASX:E79) chief executive Ned Summerhayes is bound to generate interest at the conference following the company’s pick-up of the nicely located Cue gold project in WA’s Murchison region.

He recently gave a hint to the theme of his presentation, saying: “Come 2026, we expect E79 Gold will be well placed with a raft of prospects in an under-explored hotspot of gold discovery and mining infrastructure, and with sufficient funding to follow-up our discovery opportunities with drill testing following interpretation and prioritisation of targets from the gravity survey”.

A recent review of historical exploration uncovered previously uncompiled high-grade assays over multiple targets, including 1m at 91g/t from surface and 10m at 6.96g/t from 90m.

That’s kind of interesting for a company trading at 2.5c for a market cap of $4.95m, with funding in place to get busy at Croydon.

Arika Resources is another junior presenting at the conference offering leveraged upside to an ongoing exploration effort in the prodigious Leonora-Laverton region of WA. It last traded at 2.8c for a market cap of $25m.

Managing director Justin Barton will be updating the punters at the conference on the recent step-out exploration results at the Landed at Last prospect in the Yundamindra project area which extended mineralisation along a 2.5km prospective corridor.

The results have elevated Landed at Last to priority status for further drilling. At the moment, drilling is underway at the high-grade Pennyweight Point prospect. Newsflow is strong with this one.

Black Horse Mining: (ASX:BHL):

The WA gold industry won’t admit it, but there’s no doubting that there has been some serious value creation from Victoria’s old goldfields in the modern era.

Obviously not as widespread as WA, but impressive, nevertheless.

Things began to light up in Victoria on the gold front back in 2016 when the Canadian company Kirkland Lake (now part of Canada’s Agnico) notched up the Swan Zone discovery at its Fosterville operation near Bendigo.

The Swan Zone was a zone of quartz spotted with visible gold (and antimony) that hosted more than 2 million ounces, carrying grades of up to two ounces a tonne, and making Fosterville the world’s most profitable mine for a time.

Production at Fosterville has wound back from what was a fantastically profitable 500,000oz a year operation but it continues on as one of the more profitable in Australia thanks to high-grade ore sources.

Drilling deeper beneath old mining operations to uncover new lodes carrying high grade material has also worked a treat for the Canadian-Australian dual-listed Southern Cross Gold (ASX:SX2).

It is now a $2.1 billion company thanks to the high-grade gold and antimony hits at its Sunday Creek project, just off the Hune Highway some 60km from the top of Collins Street. No resource estimate yet as the company wants to first scope out the scale of the thing, as the Canadian industry prefers.

As an aside, the company went into a trading halt on Thursday pending a Victorian government approval decision for a $30 million decline (tunnel) at the project which will provide underground exploration drilling platforms, as well access to the mineralisation.

Approval is expected but there is always uncertainty with these things. Having said that, the industry has grown more comfortable with the government and bureaucracy when it comes to mining in the gold rush state.

Four mining approvals, mainly for mineral sands operations, have been granted in recent times. That is a massive turnaround from the last 20 years. The open for business catchcry to the industry looks to be real this time.

It is against that background that new Victorian gold explorer, Black Horse Mining, is due to debut on the ASX next Tuesday under the code BHL. The $8 million offering at 20c a share was three times oversubscribed.

At the issue price, the stock will have a market cap of $12.9m ($21.3m fully diluted) which is on the modest side of things for an explorer of any description nowadays.

Like those before at Fosterville, Sunday Creek and elsewhere in Victoria, the company will be looking to revive a high-grade gold rush goldfield – Mt Egerton, 95km west of Melbourne and 35km from Ballarat.

Gold was first discovered there in 1853 and the goldfield has the distinction of being one of only eight Victorian mines to have produced more than 1Moz of hard-rock gold (1.29Moz at between 5.5-19.3g/t, or an average of 12/gt).

Things came to a stop in 1906 when the water pumps were turned off, remembering back in those days mine profits got spent on stately homes in St Kilda Road or got sent to build a church in Ireland.

So there wasn’t what nowadays is called sustaining capital reinvested by the various owners of the five shafts accessing the underground ore positions.

And that is pretty much Mt Egerton’s historical story. Apart from a bank robbery by the bushranger Captain Moonlight and some sporadic exploration by WMC and others in more recent times, not much has happened.

Enter Black Horse, named after the company which sank its namesake shaft in the town back in the days.

The new Black Horse has a rig to start drilling once it is listed. Shallow targets will be tested initially, the thought being that the crowded nature of the goldfield back in the day could well mean high-grade lodes were missed.

Later on there will drill testing of targets deeper than the 550m depth of the old workings, the thought being that like Victoria’s other historic goldfields are proving in the modern era, there is plenty of gold to be had at greater depths, at higher grades as well.

There is also the potential to find parallel Mt Egerton style repeats, with the surrounding ground only ever having been picked over by small syndicates. Their lines of workings are certainly worth investigating in a $A6,355/oz gold market.