Saturn’s success shows how junior gold stocks can outperform in face of flat bullion price

Gold’s stellar run in the first half of 2025 (up 26% in US dollars) has run out of puff. It has more or less flatlined in the past couple of months and to be honest, it looks to be rangebound in the back half of the year.

That’s the view of the economists at the World Gold Council at any rate. It has just released its mid-year review and its base case outlook for the second half does not exactly fire up the imagination.

“Under current consensus expectations for continued normalisation, gold could remain rangebound in the second half, closing roughly 0%–5% higher than current levels (still equivalent to a 25%–30% annual return),” the WGC said.

On the equity markets, the gold producers have been in retreat, albeit from levels sharply higher than at the start of the year. For the junior sector, which put on 50% as measured by the VanEck Junior Golds ETF in the first half, it’s been the same story.

There’s a lot of rotation going on, at the speculative level at least . Profits from trades in gold equities are finding their way back into lithium stocks, the rare earths sector, and a bunch of more exotic metals.

But as mentioned here previously, the junior golds have an advantage of sorts over the producers thanks to their leverage to discoveries/resource drillouts and/or maturing development opportunities that switch them over to cashflow valuations.

So while it feels as if the gold equities have gone to sleep, there is still plenty of outperformance by select juniors.

Saturn Metals (ASX:STN):

Saturn Metals (ASX:STN) demonstrates the point. Its share price has more than doubled since the start of the year to 43c for a market cap of $197 million.

And thanks to a recent flow of thick and high-grade resource-focussed drill results at its Apollo Hill project 60km south-east of Leonora, it has become something of a buzz stock.

For years it was an overlooked stock. Apollo Hill was considered too low-grade for some and there was a clear prejudice to it being a proposed heap leach operation.

When it tried to pop its head up every now and then on some good news, the market was distracted by what else was going on in the Leonora region or by the lithium boom, for as long as it lasted.

But the growth in Apollo Hill’s resource over time to the 2.03Moz (119Mt at 0.53g/t) estimate released in February started to change things up for the stock, just as the gold price was heading off to record levels.

A 2023 economic assessment pointing to an NPV of $1.08 billion and a 62% IRR at an assumed gold price of $A3,500/oz has not been lost on the market now that gold is more than $A5,100/oz.

A pre-feasibility study and maiden ore reserve are expected in the December quarter and a resource update is close at hand. A 10mtpa heap-leach operation producing 122,000 ounces annually at an AISC of about $1850/oz pretty much remains the expectation, with production targeted for 2028.

In the rising gold market, Saturn was naturally enough carried higher on those metrics. More recently, interest in the stock went up another level when resource development drilling encountered what is now known as the Iris Zone.

Intersections including 11m at 6.29g/tonne from 69m within 38m at 2.18g/tonne from 48m has outlined a wide zone of structurally-focused, thick and higher-grade gold mineralisation.

“These initial intersections from the Iris Zone are concentrated over a 350m strike length on one of Apollo Hill’s major footwall structures, however the underlying geological controls – which are more typical of higher-grade Archean-style lode systems – highlight the potential for this style of mineralisation to repeat along strike,” Saturn said.

Given similar zones are indicated elsewhere, Apollo Hill remains a 0.53g/t heap leach project but with emerging zones of high grade kickers.

It represents a step change in highlighting the growing appeal of the project as it introduces an element of selectivity on how Apollo Hill will be processed over time. It will still be a heap leach but could evolve over time to what could be described as a segmented heap leach.

Kinross’ 215,000oz a year Round Mountain heap leach operation in Nevada has segmented the grade tonnage curve with different processing options over time. It now produces its gold from a dump leach (no crushing) and a heap leach (crushing) based on an ore grade of 0.27g/t, as well as processing higher grade ore (0.66g/t) in a treatment plant.

The combined heap leach/milling operation is highly profitable too for the Canadian miner given production costs of $US1,527/oz.

Apollo Hill in time looks to be headed down the same pathway.

The Big V:

Victoria burst out of the pack as it were to provide the gold sector’s exploration highlights in recent days.

It doesn’t get to do so often, particularly when it comes to competing with exploration news out of the West.

So Ted “Mr Football” Whitten’s post-State of Origin address to the Big V when it knocked off the Sandgropers in 1990 at the WACA comes to mind – “Stuck it right up ‘em. That’s what you did. You stuck it right up ‘em”.

The ASX explorers making the Victorian exploration headlines were Falcon Metals (ASX:FAL) and Stavely Minerals (SVY). And as is the case with all exciting exploration results, the pair are now trading substantially higher ahead of what follow-up work might bring.

Falcon Metals (ASX:FAL):

Falcon was a 15c stock back on July 3 when it reported that its first hole at its Blue Moon prospect directly north of the historic 22Moz Bendigo goldfield had intersected several narrow high-grade quartz veins.

It advised that the veins were believed to be the lateral “legs” associated with nearby thicker saddle reefs in anticlinal hinge zones. As the hole was the first step in finding a suspected northern down-plunge extension the historic Garden Gully anticline, interest in the stock stirred.

After all, the Garden Gully line of reef was the most productive at the historic goldfield, yielding a recorded 5.2Moz at 15g/t.

Falcon advised it would be wedging off the first or parent hole to test for wider zones of mineralisation closer to the fold hinge and followed up last Friday with news that the first wedge had hit 1.2m grading a stunning 543g/t gold (17.45 ounces) from 544.2m.

It was a jackpot result but requires lots of follow up work with more wedges targeting zones closer to the fold hinge where there is potential for the mineralisation to widen into classic Bendigo-style saddle reefs

Falcon is now a 45c stock and interest in the story continues to build.

Remarkably, the Blue Moon area sits on an exploration licence that it seems was never drilled in the modern era by previous owners, including the now long-gone WMC and Bendigo Mining.

They focussed on the now-defunct mining license covering the historic goldfield. More recently, the exploration ground was the subject of a moratorium.

Falcon applied for the exploration licence in 2021 when it came out of the moratorium and just as the company was listing on the ASX through a demerger from Chalice (ASX:CHN), which was focussing on its world-scale Julimar PGE-nickel-copper discovery on Perth’s doorstep.

The company became the preferred applicant and the EL was finally granted in mid-2023 (yep, it’s Victoria ).

Falcon then spent a year and a half sorting through a mountain of historical records to make sure the northern plunge of the historic goldfield as it goes on to the EL had not been drilled previously ie. it hadn’t been killed off as a valid target.

Northing was found. Having mapped all of the Bendigo structures running in to the EL down-plunge, Garden Gully was clearly the one to chase.

Falcon non-executive chairman Mark Bennett – formerly of Sirius/Nova Bollinger nickel discovery fame and currently executive chairman of Victorian/NSW greenfields explorer S2 Resources (ASX:S2R) – took his excitement with the spectacular hit to social media, with a photo of the gold-studded quartz core included.

And like Ted Whitten’s earlier mentioned rev-up to the Big V back in 1990, this one could well stick in years to come: “To hijack a memorable line from Apocalypse Now, I love the smell of sulphide in the morning. But I also love the lustre of gold any time of day”.

“Here’s some core from the 543 gram hit we’ve just had at Blue Moon. That’s 17 ounce dirt. And more excitingly, it reinforces our theory about the untapped continuation of the Bendigo goldfield - one of the great gold fields of the world.

“Great job by Tim (Markwell, MD), Doug (Winzar, exploration manager) and the Falcon team in conceiving, planning and executing a brilliantly simple idea. It’s one thing to think it, but another thing to do it, and to hit a tiny target on the end of a 600 metre death or glory hole ain’t no small feat in itself. Who dares winz!’’

Stavely: (ASX:SVY):

Stavely Minerals’ (ASX:SVY) share price has doubled – albeit from 1c to 2c - in response to some impressive drill results from its Fairview North and South prosects in western Victoria.

Of particular note is Stavely’s assessment that the pair could form part of a large 10km long structure from the company’s Cayley Lode copper-gold-silver discovery in the north down to Fairview South.

The drill results included 59m at 1.31g/t gold from surface at Fairview North, including 27m at 2.33g/t from 13m, while a single hole at Fairview South returned 40m at 1.96g/t from surface, including 17m at 4.18g/t.

The Fairview prospects have been drilled in the past in a lower gold price environment and before the distraction of the Caley Lode discovery. The knowledge base suggests the mineralisation is characterised by shallow and broad zones of moderate grade gold with notable internal zones of higher-grade mineralisation.

What’s more, previous testwork demonstrated the style of mineralisation is amenable to low-capital and low-operating cost heap leach extraction. Sounds kind of familiar for some reason.

Javelin (ASX:JAV):

One of the beauties of the $A5100-gold price is that it gives juniors with even small mineable resources a shot at making their market cap and more in cash by bringing in a mining contractor and sending the ore off for toll treatment.

Javelin is in that position at its historic Eureka project, 50km north of Kalgoorlie. Acquired in December 2024, Eureka has a recently upgraded indicated resource of 78,678oz at 1.8g/t, mostly below the southern end of the old pit.

Work by Javelin has identified that 34,000oz in the southern end is immediately recoverable and given it is on a mining licence, it is the launchpad for a contract miner/toll treatment operation. By the way, the Paddington mill is 20km south.

At current gold prices, in the order of $25-$30m cash could come back to Javelin within 24 months or so.

It’s attractive stuff for a company with a $12.5m market cap at 0.2c a share. Then there is the and the exploration upside at Eureka, and its Coogee project 55km south-east of Kalgoorlie.