Small Cap Mining 2025
The rundown for 2025
Good Morning Team and Welcome to 2025.
I’m writing this over the strange week atwixt Christmas and New Year’s, when nobody expects anybody to do anything productive. And I’ve found that when nobody expects anything from you, it’s the best time to get thoughts on paper.
Given the state of the small cap market, I was tempted not to write an article guessing what may be the winners this year, but you know what?
There’s no point being a pundit without making some presumptions.
This year, I’m going to review these stocks regularly - and based on their performance, tell you what I’m actually going to do with my own portfolio - whether adding, trimming, or otherwise.
As ever, none of this is financial advice….and every share here is at least somewhat higher risk than the blue chips. If you don’t have the risk appetite, you don’t get the returns!
To set the scene, it’s worth noting that I have already argued that the large caps are going to have a bad year in 2025, with the S&P 500 falling into a bear market (a 20% fall from the start of the annum).
The index may subsequently recover within the year, but at present, no large caps are grabbing my interest (whereas last year there were many….which generated an average return of circa 60%).
Accordingly, I’m maintaining a relatively large cash pile for the dip.
Let’s dive in.
How I’m viewing the small cap market in 2025
Optimism is just not enough anymore.
The reality is that while we wait for the useless sacks of shit that is the London Stock Exchange, the Labour Party, and all involved with regulating and promoting London as the world’s financial capital, to actually do anything useful (I’d take stopping the active sabotage) - we have the market we have.
If you spend more money than you generate in profit, then as a general rule, this market is going to fuck you.
Because when you go cap in hand to the brokers and don your sickly Oliver voice, ‘Please Sir, can I have some more?,’ they’re going to shaft you with a massive discount every time. This makes creating shareholder value nigh on impossible, so it’s only ever worth investing now if either the company in question is:
already generating enough profit to break even. Note that revenue and profit are not the same thing.
enjoying a non-broker source of finance, such as from a supportive institution, HNW or similar.
getting either/both of the two things above in the near future
or has just raised at the discount, and has a reasonable cash runway to play with
To the brokers: I understand why you need to issue the discounts/warrants etc, but investors have finally wised up and the golden goose is dead and rotting. Expect more M&A/closures in this segment as the business is no longer going to be there. And if you want to IPO market to heat up, then make launches worth doing.
But what this all means, is that fairly or not, the majority of non-profit generating companies reliant on broker-raised finance are almost all non-starters going into this year.
For some context, AIM lost nearly 100 companies in 2024 to delisting, and now has less than 700 on the index - the lowest level since the turn of the century. 88 delisted from the Main Market, the largest fall since the Global Financial Crisis.
While there has been a small handful of IPOs, what is interesting to see is that - as far as I can see - every single company that has delisted was unprofitable.
Again, being unprofitable is a completely normal part of early stage growth. But this Hunger/Squid Games hybrid is making AIM a less risk-focused index, while also meaning there should be more risk capital left over for the companies which survive.
Red light, Green light?
Let’s look at the ones with a chance.
High confidence for 2025
Perhaps one of takeaways of 2024 is that the
well funded companies
with sizeable assets
exceptional management teams
and large market capitalisations
are the way to go.
Sovereign Metals is in my view, by some distance, the best investment on AIM there is. Big words that I pray won’t blow up in my face (remember, diversification is key), but this is the dog’s bollocks of what junior resource companies are meant to be about.
Kasiya is the largest rutile deposit in the world. It’s the second-largest graphite deposit in the world. The key risk - the graphite - has been proven to be very economically attractive. The rutile is incredibly rare and exceptionally valuable.
Rio Tinto owns just under 20% of the company, which has now proven the economic process through a pilot plant (that picture is 5% of the size of the real thing). SVML has a solid cash balance and no funding worries.
2025 is cheque book year for Rio and a whacking great premium is coming our way. They need to have this deposit and they will cough up.
SVML shares rose by 42% in 2024.
Amaroq Minerals continues to go from strength to strength. First gold has now been poured and a highly anticipated MRE update is coming in Q1. As the company ramps up production at Nalunaq, it’s literally going to print money from Q3 onwards
The recent placing with institutions at a record high to ensure a bridge to profitability over the next six months stands testament to the corporate strength - and then there’s the critical minerals exploration where the gold producer is on the hunt for the next Voisey’s Bay.
If anyone’s going to find it, it’s this management team - who I met with in person during the course of the year. And unless Trump is truly mad, he’s going to have to settle for dibs.
AMRQ shares rose by 54% in 2024.
Greatland Gold is probably the most well-known name in AIM’s junior resource market, which means that when it moves - and it will move - it will move fast. I would however note that as this is a stock to buy for the long term (yes, those still exist), you should be buying stock at a level you are happy with, set and forget.
For what it’s worth, I suspect that GGP will revisit the fundamental 5.8p support line below which there could be great value. But I’m also confident it will end 2025 higher than where we are now.
The management team is the bastard lovechild of Fortescue and Northern Star, they own the farm, and the Paterson is now their oyster. An ASX listing in 2025 will see the company added into all sorts of funds via dint of its size, and you will also probably see significant Australian dividend investors eyeing up the stock (franking credits do that to a man).
GGP shares fell by 34% in 2024, though the market capitalisation has not reflected the value accretion of the discounted raise - it will.
For investors looking to dip a toe into the AIM market, I would venture that these three combined will deliver an excellent return and am happy to be judged on this by the end of the year.
The explorers to watch
Of course, for those of you suffering from a touch of masochism, the small cap market offers a wide variety of explorers.
Again, it’s all about the finances. The larger companies like Sovereign, Amaroq or Greatland - even if they need capital, which they don’t - have access to all sorts of institutional and bank capital/debt - and the lenders will give them reasonable terms with a smile on their faces.
If you’re going to invest in an explorer in 2025, they need to have enough working capital to keep the lights on AND conduct their exploration program. For reference, you’re unlikely to be getting much change out of £1 million a year just to stay listed and pay salaries in an average company….
So I’m laser-focused on businesses which have either
raised recently
have strong cash balances
or in the event they might be running low, have proven they can raise capital at a reasonable price in the recent past
Let’s consider:
Arc Minerals is at this juncture probably the most undervalued explorer on AIM, and arguably one of the most well-known. At 1.25p per share and a market capitalisation of around £18 million, the value disconnect is ridiculous and it will recover in 2025.
$88.5 million Joint Venture. £4.14 million placing at 1.80p in March. Cash instalments from Anglo American. Drill bit still going in Zambia. New Tier 1 target in a license area which is clearly one of the best globally…
…and perhaps most importantly, the $24 million exploration spend commitment over three years in Phase 1 of the JV - combined with the relatively light exploration in year 1 - means we should see significant activity in year 2.
When the jackpot is struck, nobody is going to remember the movements between fractions of a penny. With Anglo coming back to Zambia in style, this stock remains one of the most popular for a reason.
Rome Resources is exploring Bisie North in the DRC, adjacent to the Bisie deposit - which is the largest, highest quality tin mine in the world. The exploration team at Rome discovered Bisie, and founded the CAD$1.4 billion company - Alphamin - which owns the mine.
With investors waiting for the results of potential ‘game-changer' assays, Stanvic has injected £4.2 million for the war effort, with four diamond drill rigs searching for tin and copper.
The only other AIM exploration company I can think of that raises funds at a premium is Guardian Metal, which has has a very successful couple of years - and hopefully another to come.
I’ll hang my hat on Arc and Rome for 2025, with the caveat that all exploration stocks should only form a small part of any risk balanced portfolio. If you’re hoping for a 20x return, you need to accept there is almost always a corresponding level of risk.
Deal or No Deal?
Beyond exploration, there’s three key stocks to consider when it comes to wheeling and dealing. All three need an external partner to develop their assets, and all three should see this happen in 2025.
First up, Asiamet. $3.55 million raised in October with DOID. Optimisation works finally released, with the total pre-production capex estimate reduced by $58 million to $176.9 million as a shareholder Christmas present.
BKM is a very attractive asset, there is a reasonable financial runway, and now the chaps in charge just need to get project level financing over the line in H1 2025.
Along the same lines, there’s Alien Metals. I’m breaking the finance rule here because the company is clearly low on cash - but deals for Hancock and Pinderi are being worked on - and the potential for a really sharp rise is there.
The Hancock deal is being negotiated by a well-known boutique investment bank, and I am confident that a deal will be struck this year. At this price point, and given the small amount of capital needed to develop the mine, I think UFO will end 2025 far higher than it is now. Remember, Hancock is in the perfect position and is the most easy mining operation imaginable.
Alien has delivered the Native Title agreement, MoU with the port, development study and mining licence for Hancock - and now it just needs to deliver.
I’m also keeping a very close eye on Blencowe Resources. The company recently raised £1.6 million, partially to fund 6,700 metres of extra drilling at Orom-Cross in order to upgrade the current JORC 24.5Mt at 6.0%TC. While the company will need to find funding to get the mine built from H2 2025, its current £10 million market cap leaves plenty of upside for 2025.
I’d also highlight Bezant - which just raised £560,000 and is now in a position to develop Hope & Gorob in Namibia - it just needs a partner to finance a deal and the numbers look lucrative compared to what is now a tiny market cap.
Power & Guardian
I’ll continue to wave the flag for these two through 2025.
Power Metal & Guardian Metal are doing everything right (though the market has only rewarded one thus far).
POW still retains more than 40% of GMET, has signed the UCAM uranium JV, which is now the second-largest exploration campaign in the Athabasca (world’s no1 uranium address) and has also been laying the foundations in Saudi Arabia.
With a share price far below the value of the assets, this one should finally recover to a more reasonable valuation in 2025 - though cash may be an issue soon. One hopes this will be resolved through Saudi partners - or Rick comes to the rescue.
As for GMET? Assays and the new asset are all good news, with high grade tungsten being identified at Pilot Mountain. It now seems clear that grant funding is coming in Q1 2025. And with the Chinese tungsten export ban being further exacerbated by Sino-US tit-for-tat exchanges, I firmly believe that the US under Trump will put in place very demanding policies to ensure that a domestic supply of tungsten, alongside other defence metals, is up and running as soon as possible.
Guardian has managed to attract some solid interest among US institutions…and I’d like to highlight the efforts of CEO Oliver Friesen who is not only adept at marketing the company for a social media age, but runs the business like it has a market cap far higher than it currently does.
African highlights
Jumping over to Africa, we need to consider African Pioneer’s licenses. They’re very good. And with the £1 million convertible loan with Sanderson (convertible at 2.8p per share), this £3 million minnow may be in for a decent rise in the event of any new deals coming through. With every major from Ivanhoe to Anglo coming back to Zambia, there is a good chance here.
You wouldn’t throw the kitchen sink at this but equally, I’d argue this is a good bet for the new year.
For those looking to something bigger in Zambia, perhaps consider Jubilee Metals. As I said recently, I’m not afraid of the dip. With flooding now ongoing in Zambia, it appears that we are in for a real rainy season (solving the power issues), and the book value of JLP’s assets are far in excess of the market cap.
I would note, however, that there does appear to be continued selling (as speculated, by larger funds in need of the liquidity), and perhaps Jubilee may even become a buyout target for a larger fish who knows a good thing when it sees it.
It’s perhaps worth considering the performance of Pan African (also operating in South Africa), which rose by >100% in 2024….with an ‘enviable track record in executing world-class tailings retreatment projects.’
Jubilee’s tailings tech is world class and the share price is a steal.
Then we have the helium plays.
Helix Exploration has now purchased a second-hand Xebec PSA plant for £397,500 to be installed at the discovery at Rudyard - the question for 2025 is over how much cash it can generate, and whether the profit will be enough to cover working capital and the purchase of further assets to explore.
FWIW, it is clear that capital on reasonable terms will be there given the hugely oversubscribed IPO - and beyond this, management have high level industry connections.
Pulsar is now raising up to $7.5 million at 0.3p per share - always helpful to know cash will be fine - but the million dollar question is on whether the company will enjoy success when deepening Jetstream #1 later this week…by a minimum of 1,640 feet. Success could see a significant rise.
Predator Oil & Gas raised a couple of million two months ago, so should be fine for the medium term. The focus is on the commercial potential of its MOU-5 exploration well within the Guercif licence (75% interest), located onshore Morocco.
This well is targeting a massive gas prospect of 5.9 Trillion Cubic Feet, with the distinct possibility of valuable helium reserves as an added bonus.
I’m also throwing in Mendell Helium as one to watch, though value depends on its listing price later this year. If the model can be demonstrated to work, this could be attractive in this market - with the bread and butter wells generating capital to explore the more lucrative (but riskier) opportunities in the US.
The helium stocks are as volatile as the gas itself, and there are long established price patterns before, during and after drilling. There is no shame in trading these; HE1 traders have made a fortune while the investors lost out.
But a large discovery at any could see rockets appear.
The Moonshot for 2025
Emmerson shares peaked at 9.5p in May 2022 and have since fallen to 0.61p - a drop of almost 94%. I’m not picking this stock as my personal moonshot for the assets, or the management…
It’s all about the legal case.
Emmerson just raised £850,000 at 0.65p so is financially fine for now.
And the company has contracted Boies Schiller Flexner (the ‘Boys’) to initially have a sit down chat with Morocco, and failing that, engage in a ‘claim for arbitration under the BIT, seeking damages for the harm…plus interest, costs, and any such further relief.’
This investment is no longer about the Khemisset Potash Project (which, incidentally, is world-class both in terms of size and environmental credentials), but about whether the Boys can get a sizeable settlement out of Morocco.
They recently served as lead counsel for GreenX Metals in its arbitration with Poland, and for subsidiaries of Indiana Resources in its dispute with Tanzania. In the case of GreenX, the company was awarded £252 million in a unanimous tribunal decision against Poland.
The country lodged an appeal in November but this will go nowhere, with Prime Minister Donald Tusk admitting that:
‘The case is rather hopeless, because a lost arbitration is a lost arbitration. We have two big cases on our shoulders. The PiS government blew this issue. The Australians, as you know, were promised that their mine would be built there. For years they were misled and later the commitment was withdrawn. It was quite obvious that they would go to arbitration, and it was rather obvious that they would win this arbitration.’
The difference between the two companies is that GreenX has a market cap of £94 million, and Emmerson less than £8 million. I own shares in both and suspect that when GreenX is handed over the cash, it will rocket and also have a feedback effect on Emmerson. Cash is king after all.
However, these are binary plays on legal cases - so don’t bet the house.
Summarising for 2025
The S&P 500 will fall from 5,919 points at the opening of the last day of 2024 to 4,735 points at some point over the course of the next 12 months.
A portfolio equally split between Sovereign Metals, Amaroq Minerals and Greatland Gold will deliver a positive return in 2025.
Arc Minerals and Rome Resources will both deliver a positive return in 2025 from successful exploration activity.
Asiamet, Alien, Blencowe & Bezant will all sign deals that position them better strategically, and all should end the year higher given their bottom of the barrel share prices. However, this is conditional on deals being signed by the end of H1 2025.
Investing in both Power Metal & Guardian Metal together should see a positive return; GMET will likely have a better Q1 and POW a better Q2.
Jubilee Metals will end 2025 substantially higher than it entered it, while African Pioneer will sign some kind of deal with a major for further exploration.
Helix, Pulsar & Predator will all trade at a 30% premium to today’s share price at some point in the next 12 months. A real win could see any of these three deliver significantly higher returns.
Emmerson will be a star performer of 2025, but this all hinges on winning its legal case against Morocco. Boies Schiller Flexner does not take on losers.
To give some colour to these predictions, it’s important to remember that this is not advice, and that all of these stocks are high risk relative to larger companies.
If you prefer something lower risk, Legal & General offers a 9% dividend and share price that has remained relatively stable over the past couple of years. There is absolutely nothing wrong with a zero risk 5% cash ISA either.
They key point is that you should be investing in small caps with capital you can afford to lose, but hope to multiply.
And I think these stocks could be the winners of 2025.
Happy New Year!