No miners? "You're missing out", says Fist. Plus 2 ASX names to get you started

The materials sector has roared back to life in 2025, climbing more than 26% year to date and outpacing every other major sector on the ASX. 

Gold has surged, uranium has rallied, and critical minerals have moved from speculative themes to strategic assets, reshaping portfolios and policy agendas alike.

For investors, this is not the sleepy, cyclical grind of old; this is a structural repricing driven by new demand curves, supply constraints and strategic importance.

To understand what’s driving the rally, how sustainable it is, and where the best opportunities lie today, Livewire reached out to Matthew Fist from Firetrail Investments.

Fist is a geoscientist turned fund manager who cut his teeth underground at BHP, giving him a perspective that blends spreadsheets with real-world cost curves, geology and risk. He has little time for hype, but a lot of conviction when the fundamentals line up.

And right now, he thinks they’re lining up.

Firetrail’s Australian Small Companies Fund (ASX: FSML) is positioned squarely in the slipstream, running a deliberate overweight in resources, a stance that has paid off.

The fund has delivered 35.22% over the last year, well ahead of its benchmark, with 18.86% annualised since inception.

Firetrail has ridden the wave of materials outperformance, but more importantly, Fist argues the wave hasn’t crested yet.

With that backdrop in mind, the full Q&A with Matthew Fist is below.

The materials sector is up over 26%* YTD (*as at 04/12/2025)  – what’s driven this outperformance, and is it sustainable from here?

The rally in resources stocks has been driven by gold, uranium, base metals and critical minerals. Yes, it is sustainable, and we are bullish on the outlook – it has never been a better time to be an investor in the sector.

Resources at the intersection of several megatrends that are playing out in global markets:

• Energy security
• Decoupling of global supply chains and East-West bi-polarisation
• The rise of (commodity and energy-intensive) artificial intelligence
• Decarbonisation

Putting these trends together means:

1. Stronger demand, and 
2. Increased strategic importance of resources. 

What this means is higher prices and better free cash flow. 

Given the strategic nature of the sector and the fact that ChatGPT won’t be operating a mine anytime soon, we believe the multiple that investors are willing to pay for these cash flows should also increase.

Australia is a unique market compared to its global peers. Our index is around 35% resources. This is not because Australians love punting on resource stocks. It is because we are blessed with some of the best geology on the planet. Combined with the social, physical and political infrastructure to enable the efficient, safe and profitable extraction of resources.

If you don’t have an allocation to resources in your portfolio, you are missing out.

Gold, silver and copper have surged this year, while iron ore has barely moved, and crude oil is down. Beyond the diversified miners, which subsectors within materials look most compelling right now and why?

We are fundamental investors, which in resources means we spend a lot of time looking at supply and demand, as well as the cost (both operating and capital) that it takes to produce commodities. 

So, it will come as no surprise that the commodities are those where: 

1. We see markets in a current or future deficit, where demand exceeds supply, or 
2. Prices and returns on capital are unsustainably low.

These are energy, uranium, base metals, and select bulk materials like manganese and bauxite.

Given the strength in key commodities, are investors simply riding short-term price momentum, or are you seeing genuine improvements in fundamentals across the materials complex?

It depends on the commodity. We are seeing genuine improvements across many commodities; however, there are certainly pockets of irrational exuberance and some highly concerning valuations for what we consider to be ‘concept-stocks’.

One fundamental improvement we believe is being underestimated by the market is the increase in capital costs and the amount of time it takes to develop resource projects. This means higher prices over the medium term and favours those with existing assets or high-grade orebodies.

As a graduate at BHP, I once worked closely with an underground shift boss who taught me many life lessons. One of his favourite quips was “the red pen mines faster than the orange jumbo”. 

That is another way of saying that things always cost more and take longer than a spreadsheet would suggest. When we look across the sector, the orange jumbo has a lot of catching up to do, or more likely, the red pens need to rewrite the plan.

What are the key risks for the sector from here, and how resilient are materials if growth slows?

The key risks to the outlook are clearly global growth rates, and particularly the outlook for the Chinese property sector. 

On a more local level, Australia has a productivity problem. Energy costs, labour costs and changing royalty goalposts all present risks to the sector.

Which stocks are you backing in the sector right now and why? Could you share two standout names in your portfolio?

Where to start! It is like choosing a favourite child.

Minerals 260 (ASX: MI6): It is no secret that the gold sector has been on a tear. 

There is now a fundamental valuation gap between expensive producers and high-quality project developers (these are rare!). 

This will sort itself out in one of two ways. Either the share prices of development companies will rerate, or they will be taken out. Most likely both.

MI6 has the Bullabulling asset. Located near Kalgoorlie in WA, it has a massive 4.5moz endowment, a low strip ratio (low cost), and a decent grade. If the asset were in production today, we estimate it would be valued at around A$3.5bn compared to the current EV of ~A$700m.

Firefly Metals (ASX: FFM): Everyone wants copper. From fund managers to BHP, the pivot to “future-facing” materials is on – and for good reason.

Firefly has a high-grade asset in Canada that we believe can produce over 100ktpa for 20 years. This is a truly world-class asset in a tier-1 location, and it is significantly undervalued by the market.

Managed Fund

Firetrail Australian Small Companies Fund

Australian Shares

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