With the gold price having run hard and investors reaping the rewards, the focus is now pivoting to the next big growth opportunity – in gold and other high-demand metals.
Many of the small-cap explorers Mining.com.au has spoken to recently are seeing a rising interest from institutional, and other, investors in both Australia and North America.
Grant Haywood, Managing Director of junior gold producer Horizon Minerals (ASX:HRZ) – which has a market capitalisation of just shy of $140 million, says the company has noticed the number of inbound enquiries rise, particularly over the last six months, from the retail side, high-net-worths and institutions.
“There has been good support from funds in the US, Europe and domestically, but we have seen the strongest demand, particularly for gold, come out of Asia,” he tells this news service.
Horizon entered production early in 2025, pouring first gold from its Boorara and Phillips Find projects in Western Australia.
The company’s strategy is to generate cashflow by bringing online a series of small-scale mining operations in the Western Australian goldfields and generating cashflow by using third party infrastructure to process its ore. This cash flow will then be used to fund its bigger gold production plans in the region.
As the gold price rallied, the larger gold producers were the point of focus for investors – institutional and retail alike – but there is now a growing interest in the next big growth opportunity in some of the smaller players.
“Although at record highs now, the gold price has been strong for quite a while, and producers have been the ones most rewarded,” Haywood says.
“I think this has been largely priced in, and now institutions are looking for growth opportunities more down the curve, especially those companies who are looking to come into production in the near to medium term, with re-rate potential as they transition from developer to producer.
“We should see that investment move further down into exploration companies.”
In late May, Horizon revealed it had received firm commitments from new local and offshore institutional and sophisticated investors for a $30 million placement to fast track its growth strategy.
That placement introduced several new institutional investors to the register.
“Institutional investors are always looking for value while aiming to derisk their investment as far as possible,” Haywood says.
“Our projects are in a great gold mining province in the eastern goldfields of WA, and in a stable jurisdiction, and our project is somewhat derisked by having a brownfields processing plant already largely approved with access to grid power and bore fields for water, which allows us to fast track production compared to obtaining approvals and building from new.”
Meanwhile, Dan Denbow – CEO of Canadian gold explorer Signature Resources (TSX-V:SGU) – says there is a broadening interest from more generalist investors.
“The traditional specialist funds have been there all along but we are hearing of broadening interest from more generalists inquiring about the business and starting to see them showing up doing the homework on the space,” he tells Mining.com.au.
“The early adopters are there already but the broader generalist demand is really in early stages.”
Liquidity still key barrier to breakthrough
While the sustained gold rally is starting to result in a “trickle-down effect”, according to Denbow, the barrier to investment stems from a lack of liquidity.
“Liquidity is always a gating factor, until trading liquidity improves it limits the speed to which ‘trading down’ can occur,” he explains.
“But we are seeing money trickle down as the larger companies rise in value or M&A transactions create liquidity events and those monies need to get reinvested.
“As performance continues, you will see the willingness to take on more speculation which means either stepping down in market cap or stepping out and taking on more geopolitical risk.”
Signature Resources, which has a market capitalisation of C$9.8 million ($10.9 million), is focused on expanding its wholly owned Lingman Lake Gold Deposit located in the Red Lake District in Northwestern Ontario, Canada.
At the end of June, the company released a maiden resource for the project which comprises 2.15 million tonnes @ 1.38 grams per tonne gold for 95,200 ounces of indicated material and 18.4 million tonnes @ 1.14g/t gold for 674,320 ounces of inferred material.
Canaccord Genuity Mining Analyst Tim McCormack tells Mining.com.au the major producers in North America have not witnessed the same level of investor interest as the big Australian producers.
“If you look at the North American sector, certainly the senior producers up there – and that’s Barrick, Kinross, Pan American, B2, Newmont – they’re actually quite a lot cheaper,” he notes.
“They’re trading at like a 40% discount to fair value, which is quite a bifurcation from our market for the scale of those companies. Similarly, the intermediate guys and even the juniors are a little bit the same.
“There’s a bit of a pool of money, I think, out of Aussie gold equities considering the run they’ve had and then repositioning into some of those bigger names on the North American exchanges, where you can potentially, arguably, find cheaper exposures.
“That money is flowing around not as a closed circuit on the ASX with these gold names for sure.”
According to McCormack, the institutional money is starting to flow down to the earlier stage companies, but the “floodgates” have not quite opened yet.
“There’s not a management premium embedded in them or anything like that, that’s just a genuine stock that looks good and is now attracting institutional money,” he says.
Investors starting to ‘kick the tires’
Signature Resources’ Denbow agrees explorers are still lagging the developers and producers but things are starting to look more favourable for the small caps.
“Explorers are definitely out in the cold. Until recently we were out behind the barn. Now there is enough interest that they will let us see where the warm fire is burning, but only through the window,” he says.
“Interest has definitely been in the large producers with a few mid-cap producers with growth seeing interest. Development projects are seeing more interest from investors and strategics, which has brought them in from the cold.
“Late-stage exploration with a near-term path to development has been the next to see interest, but it hasn’t been widespread. And early stage exploration is a crowded space and we have mostly been talking to ourselves or the cows but success above is starting to bring investors out to kick the tires.”
Denbow says compared to the last gold peak, stocks are barely up while the price is nearly double.
“The good news in my view, unless the world goes absolutely bonkers, the slow conversion of macro investment committees has just begun, which is very good for gold equities,” he says.
“If gold is flat to slightly up they will be looking to join the party.”
Denbow notes that institutional investors have shown an interest in Signature Resources’ location – northwest Ontario – because of the low political risks.
Ontario ranked in the top 10 for investment attractiveness in the Fraser Institute’s Annual Survey of Mining Companies 2023.
Signature Resources’ Lingman Lake project is located in the Red Lake District, which has produced around 30 million ounces of gold over the past century and is considered one of the highest grade Archean gold camps in Canada.
The project spans 24,000 hectares, with a 32km east-west strike distance covering about 85% of the Lingman Lake Greenstone Belt.
“We are still defining the property and what it ultimately will look like so our development timelines are still long-dated keeping us in the speculative bucket for investors, but we believe that will be changing and earn those with the patience a good return,” Denbow notes.
North American investors are also moving into other small cap players in commodities like copper and lithium.
Kincora Copper (ASX:KCC) has attracted investment from prominent North American investors Rick Rule and Jeff Phillips, who agreed to cornerstone the junior explorer’s C$4 million private placement.
The company has adopted the prospect generator model, securing asset-level partnerships with multi-billion-dollar producer AngloGold Ashanti, Fleet Space Technologies, Earth AI, and Orbminco (ASX:OB1) that paves the way for over $110 million of potential funding.
Nevada-focused Astute Metals (ASX:ASE) – which now has a dual focus on gold and lithium – is also witnessing rising North American investor interest, according to CEO Matt Healy.
“I think with the recent uptick in the lithium price, there’s definitely a bit more interest coming in for lithium,” he told Mining.com.au at last week’s Noosa Mining Investor Conference.
“Also being in the US, it’s very clear that the Americans want to establish their own critical minerals supply chains.
“If you look at the amount of capital raising done for ASX companies that have recently taken on not just Nevada projects, but US projects more generally, there’s a lot of capital from the US for mining.”
Astute is advancing the Red Mountain Lithium Project in Nevada – another top 10 jurisdiction for investment attractiveness – and the Needles Gold Project, also in Nevada.
Write to Angela East at Mining.com.au
Images: Horizon Minerals & Signature Resources
