Small Cap Mining 2025: February Review

So far, so good? Mostly!

Good Morning Team.

As promised, here’s your monthly review into my small cap mining picks for 2025. And delightfully, we seem to be doing well thus far.

As ever, please remember that all small cap stocks come with elevated risk in return for potentially larger rewards. While not advice, you should be careful to invest only what you are comfortable with, from a position of financial resilience and within a diversified portfolio.

For anyone unsure of whether this is the sector for you, I’d suggest a minimum of two years of prior investing - and you might want to use a Demo Account from any of the major platforms to test out your strategy before using real money.

That being said, let’s dive in.

Macro cracks

We’ll start with my wider macro position that the S&P 500 will fall to 4,735 points at some point over 2025. The index is up by a little under 3% year-to-date thus far, but the cracks are beginning to show.

We’re staring down the barrel of an artificial intelligence and critical minerals showdown, amplified by massive tariffs that have the potential to hammer world trade.

Beyond the tariffs, I’d also warn that it’s likely Nvidia will be prevented from shipping chips to any country mailing them on to China, including Singapore. I’m not entirely sure how the market might react, because fundamentally this will mean a gigantic loss of revenue. However, sentiment might win out with the narrative that Nvidia’s chips are so exceptional that they can’t be given to foreign powers.

Tesla’s earnings are a joke. Did you catch the JP Morgan note? When sales are collapsing and a bunch of the profit is based on unrealised Bitcoin gains, this is only going to end one way. Unless….Trump carves out a tariff exemption for Tesla and not its competitors. But he wouldn’t do that surely…

As for Bitcoin itself? Compare BTC and the NASDAQ and tell me it’s not just a simpler way to bet on big tech?

Insider selling remains extremely strong, and I remain of the view that this is only a matter of time.

I’d also point out Deutsche Bank is now using memes more than words to make its point. If nothing else, could this be a sign of the cycle top?

In other news, it’s been good to see the Trumpcoin grift crash too - though the President will now have his money from TikTok.

The Power of Three

Last month I noted on my highest confidence picks that ‘a portfolio equally split between Sovereign Metals, Amaroq Minerals and Greatland Gold will deliver a positive return in 2025.’

I noted that ‘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.’

Let’s consider. SVML is up 4% year-to-date, AMRQ up 5.7% year-to-date, and GGP is up 22.2% year-to-date. What’s quite interesting is that both SVML and AMRQ were up by more than this over the month - and I would venture that there is going to be more than a little volatility for these two over February - both up and down.

For context, SVML has now updated its optimised PFS (effectively certified by major shareholder Rio Tinto) and this marks the moment that a buyout can come at any time. Expect significant politicking as Rio want the first rutile deposit discovered since the 1960s in their back pocket, and Sovereign would prefer to sell.

On the other hand, the SVML team has the operational and financial capacity to build this thing themselves. And as a genuine, unique, Tier 1 strategic asset, the standard premium over the prevailing market cap of the junior as a starting point for negotiations does not apply.

Let the games begin.

As for Amaroq, the ‘Disney’ story is over. I’m unsure what the technical term for this is on the Lassonde Curve (or even if there is one), but the bottom line is that first gold has been produced, the MRE update is on the way, they’re exploring all over Greenland…but within the next few months, the story is going to be about ramping up production, gold produces, AISC, tax rates etc etc

This is similar to Greatland Gold, in that the story is now about the profitability of the company. I remain of the view that AMRQ is undervalued compared to the free cash flow it will generate by the middle of 2025.

It’s also king of Greenland in terms of exploratory tenure and drilling capacity. Given Trump’s interest in the island, it may grow much faster than you think.

As for Greatland Gold, that’s a stonking rise and I would not blame anyone for taking some profits off the table. However, while the GGP story is again about production and profit (all going according to plan here), I’d argue that next rise is actually going to come from a certain US-based ETF buying shares in order to follow its underlying index.

I’ve had roughly a dozen messages highlighting this discrepancy now, so if anyone can come up with a simple explanation, please comment below.

But for brevity, the US version of the VanEck Small Cap Gold Miners ETF (GDXJ) appears to hold significantly less of GGP than it ought to based on the index it tracks.

The US version holds $20,180,729.82, or 0.41% of its total holdings, in GGP as of Friday based on daily holdings - you can check here, but make sure to change the site to the US investor side.

On the UK side, GGP represents 0.8% of holdings, so - and please, please remember this is just speculation - the US version of GDXJ may be obliged to roughly double its position and buy up $20 million in GGP soon.

Can anyone say short squeeze?

Arc & Rome

ARCM is up 15.4% year-to-date, Rome is down 28.6%. Arc’s assays from Zambia are due any day now (possibly their release is being timed with Indaba where Anglo CEO Duncan Wanblad, who recently made a song and dance about returning to Zambia in style, will be giving a speech). Anything around Sentinel’s average 0.48% grade with evidence of sulphides, and it should fly.

This is critical by the way. The oxides found by Midnight Sun are high grade, and exciting - but if you want Tier 1, you want a large scale, lower grade sulphide deposit. Of course, if we get those higher grade oxides, it’s still a positive - but it’s not what Anglo is looking for.

As a reminder, any licenses within 5km of the JV taken on by Anglo will be swallowed into the JV alongside an additional spend commitment - so let’s wait and see.

But really there’s not much point in speculating - the assays will be out soon - and remember, there’s more than $20 million to be spent over the next two years on exploration.

As for Rome, the exploration side is going well, the model is being proven, and the team are now drilling to the same depths as the adjacent Alphamin Bisie deposit. Once again, this is the same exploration team that found Bisie, and it took them some time to prove up the model. The company remains fully funded for work and all is going according to plan - so why the drop?

Basically, it’s the risk of operating in the DRC, near the border to Rwanda. M23 rebels backed by Rwanda have effectively taken the ‘nearby’ city of Goma and continue to march on - the last time this happened was in 2012, and it didn’t last long because Rwanda withdrew after being threatened with losing international aid.

I suspect we will have the same outcome shortly, but regardless, Alphamin and Rome have both made clear they are unaffected by the fighting, with their sites in a jungle a huge distance away with virtually inaccessible roads from Goma.

North Kivu has been a region of violence for decades, and there are some 100 groups in the region vying for power. In that time, Alphamin has never yet lost a tin shipment.

When this calms down, it should recover.

The dealmakers

Asiamet - effectively flat ytd, and we’re just waiting for financing news. BKM project costs were reduced by some $58 million and it’s just a waiting game.

Alien - down 20% ytd, but on very thin volume. In a recent investor call, directors noted they have no plan to place shares anytime soon, and expect to sign at least one JV deal which will come with a cash component by the end of Q1. Proof will be in the pudding.

Blencowe - up 7% ytd (but again this means little given thin volumes). SAFELOOP product testing came back with exceptional results, and like the others this is just a waiting game for financing - but these results makes getting an offtake prepayment much more likely.

Bezant - up 25% ytd, while they wait for the Environmental Clearance Certificate, Thursday’s planning update shows they’re really going for a mine build. Most importantly, ‘encouraging pricing meetings’ and ‘ongoing negotiations’ are the key words - and all we can do is wait.

The good news for the combined four is that if you hold all of them equally, you are slightly up (though probably flat when accounting for the spread). The other good news is that all are progressing nicely - so don’t throw the sink at them, but equally, keep a close eye.

POW and GMET

‘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.’

Pow is down 7% ytd, and GMET is up 13.3% (though it was higher earlier in January) - so the theory is working.

The bottom line is that Guardian investors are near to grant funding, and are extremely well positioned in the tungsten space. I warned that tungsten would face Chinese export controls years ago - and now that we are here, it’s going to get even better.

Rumours are swirling that Trump plans to rescind grant funding for projects in allied territory - and increase funding for assets on US soil. China will almost certainly tighten its export controls.

Watch this space.

GMET continues to be well funded, and with the acquisition of Tempiute (which can probably get up and running for very little capex - say $50 million), the ambitions are getting grander.

Power Metal, on the other hand, is staying quiet on the marketing front, and while the business has been able to access funding at a premium before (Rick Rule, Purebond etc), the share price is likely a function of funding concerns.

With the CEO making waves in Saudi Arabia (which regardless of your thoughts on human rights, is not short of capital), the hope is that a money deal is in the making. Bill’s the CEO of the Power Arabia division - and he will shine a spotlight on the company when he can.

I’d also venture that interest in POW will heighten towards the end of this quarter as the £10 million uranium drilling campaign in the world’s No1 uranium address starts to garner attention.

POW remains thoroughly undervalued on a fundamental basis.

JLP & AFP

Jubilee Metals shares have risen by 15% ytd - the sellers appear to be out (yes, I know, a fairy dies every time someone says this), but more importantly, the rains have come for Zambia and power is now less of a concern than it was a month ago.

Accordingly Jubilee has sorted out the power issues at Roan and now it can generate and sell the copper needed to send the share price back to a fairer valuation.

Happy days.

African Pioneer shares are flat ytd, but with Indaba ongoing, all the majors returning to Zambia, and some strong licenses, I remain of the view that a transformative deal for the £3 million minnow is on the table.

At this market cap, any deal will change the game.

Helium volatility?

Helix, Pulsar and Predator are all down around 15% over January - as I noted a month ago, ‘The helium stocks are as volatile as the gas itself, and there are long established price patterns before, during and after drilling.’

I’m not overly concerned on these, and again trading to establish a decent position for yourself is going to be the optimal strategy. HEX should be generating revenue fairly soon, while PLSR results are incoming and PRD is expecting MOU-5 drilling operations to start close to the end of February.

February should see positive upwards movement for all three based on the classic FOMO - though HEX may take a while longer as the placing churn clears. I do think all three could rocket at some point this year, but could not put a date on this.

The Moonshots

Good news! Emmerson is up 30% in a month, and GreenX Metals up 16%. You can be forgiven for banking profits now - though there should be significantly more to run with both.

Emmerson secured up to $11 million in litigation funding at the start of January and is well funded for working capital given the placing in December. Boies Schiller Flexner will put this cash to good use, but remember this is a long-term play.

GreenX has announced that Poland has lodged set-aside requests with both English and Welsh courts, and also in Singapore. This is a jurisdictional challenge (based on procedural unfairness) and is in my view very, very unlikely to succeed.

I suspect it’s more of a ploy to delay payment, with Poland offering to give up the legal games in exchange for a smaller settlement.

The Bottom Line

The cracks are starting to show in the US bubble. Maybe not today, maybe not tomorrow, but soon.

When it does pop, the mining small caps will recover - and given then critical minerals trade war, these stocks are worth far more than the market gives them credit for.

For now.