It stores energy in tanks of liquid containing dissolved vanadium. Bigger tanks mean more hours of storage.

ARENA backed the Port Pirie project with $5.7 million and runs the federal government’s $500 million Battery Breakthrough Initiative. Building more vanadium flow batteries means more demand for the liquid, one of their biggest costs.

China makes about three quarters of the world’s vanadium. Most of it’s dug up as an iron ore called titanomagnetite, which has vanadium and titanium locked up inside it.

To get the vanadium out, the industry roasts the ore with sodium salts at up to 1,200°C and then washes it with water. The vanadium comes out and gets sold. The titanium and the iron go to the scrapheap.

This morning our portfolio company Mount Ridley Mines (ASX: MRD) said Selectro recovered 96% of the vanadium from a titanomagnetite sample without roasting it, and took 49% of the titanium and 78% of the iron along with it.

Selectro has now run on three ores. So far it’s pulled out:

• 92% of the scandium out of MRD’s own clay,

• 92% of the aluminium and 95% of the gallium out of another company’s bauxite, and

• 96% of the vanadium out of this one.

Every new ore Selectro cracks gives MRD another corner of the mining industry to sell its processing tech into.

A process that’s worked on three different ores would normally belong to a company a lot bigger than $63 million, and MRD closed yesterday at 4.5c.

The Third Ore Through MRD’s Selectro

Selectro is a chemical bath MRD built to pull scandium and rare earths out of the clay at Grass Patch, its deposit 25km north of Esperance in WA. The industry calls the bath a leach.

On its own clay it recovered 92% of the scandium against 28% for the industry’s hydrochloric acid.

Then in October MRD borrowed some bauxite from another company and Selectro took 95% of the gallium out of it.

An aluminium refinery doing the same job leaves a caustic sludge called red mud, which has no use and sits in a dam forever. Selectro left a small pile of sand.

Titanomagnetite is the third ore and the second from outside the company.

A leach is normally a recipe for one ore. Selectro was built for clay, and in the space of a month it’s worked on bauxite and an iron ore at the first attempt, before anyone tuned it for either.

MRD’s whole plan rests on the process working on other people’s ore. Every time it does, a new commodity opens up for the licence, and clay rare earth projects, aluminium refineries and vanadium producers have nothing to do with each other.

In March MRD was a company with one deposit. This morning it’s a company with a process three industries could pay to use, and the deposit is still there.

When we added MRD to our portfolio we were onboard for the scandium potential. The gallium out of bauxite in October was a bonus we never priced in, and vanadium was never on our list at all.

We think the process alone is worth more than $63 million after three ores, and let’s not forget MRD also holds the world’s biggest scandium resource.

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How Selectro Split the Vanadium From the Titanium

Allister Caird explained a leach to us last month with a tea bag. The ore is the leaves and the bath is the hot water, and the metal ends up in the water where you collect it.

This time MRD needed two cups.

The first cup took almost all the vanadium and most of the iron and barely touched the titanium. Only 9 units of titanium out of every 100 came out. MRD’s view is the water was already full of iron and vanadium and had no room left for the titanium, the way salt stops dissolving once you put too much in a glass of water.

So MRD poured the first cup off, put the leftover solids into fresh water and let it go again. With the iron and vanadium mostly gone, the titanium came out, and by the end of the second cup 48 units out of every 100 had been recovered.

Add the two cups together and Selectro got 96% of the vanadium, 49% of the titanium and 78% of the iron out of the sample. The second cup hasn’t been tuned yet, and MRD expects the titanium number to climb once it is.

The part we like most is what was left in each cup. The first ended up holding mostly vanadium and iron and the second mostly titanium. MRD set out to get the metals out of the ore and got them partly sorted into two cups as well.

Getting each metal back out of the bath as its own product is a separate job from getting it out of the ore, and MRD hasn’t done it on any ore yet. The announcement calls this result a proxy for separation, and MRD thinks it can control the split by adjusting the conditions.

Separation is the expensive part of any processing plant, and Selectro made a start on it without trying. We’d have taken 96% of the vanadium on its own and called it a good day.

What Selectro is Worth to a Vanadium Producer

Vanadium is bought and sold as a powder called vanadium pentoxide, priced by the pound. The sample MRD ran graded 1.3%, which is 13kg of the powder in every tonne of ore.

At last year’s Chinese price of about US$5 a pound, a tonne of this ore carries about US$145 of vanadium.

Selectro brought half the titanium and three quarters of the iron out with the vanadium, running in a bath below 100°C.

MRD’s pitch to the owners of this ore is two more products to sell from every tonne, and a far smaller fuel bill because a bath under 100°C burns a lot less than a roast at 1,200°C.

The vanadium ends up in batteries like the one at Port Pirie. MRD says the vanadium price is high and jumps around because three quarters of the supply sits in China, and the price has made flow batteries hard to finance. A cheaper source outside China is what the battery builders have been waiting on.

Governments here are trying to build one. Queensland has just finished a processing plant in Townsville so a company can prove it can turn Queensland vanadium into flow battery liquid, and Canberra has its $500 million battery fund behind the industry.

MRD’s pitch to the battery crowd is more vanadium out of every tonne, processed here.

Australia, Japan and the US are paying for Alcoa’s gallium plant, which gets 70% of the gallium out of bauxite. MRD got 95% in a lab. We’d say the same governments should be looking at this vanadium number the same way.

What the Titanium Means for MRD’s Scandium

We wrote in August the process might end up worth more to MRD than the ground it sits on. Three ores later we’d drop the might.

The titanium also ties back to Grass Patch. The clay there holds 47,357 tonnes of scandium, the biggest reported scandium resource in the world. Scandium’s main use is making alloys stronger.

Put it in titanium and the metal holds its strength at higher temperatures, which is why aerospace and defence are the first customers in line for titanium-scandium alloys.

MRD’s CSIRO program is already testing them (we wrote about it here). The alloys are still in the lab everywhere, and MRD thinks a company with its own scandium can get in before they go commercial.

Whoever ends up making titanium-scandium parts for aircraft will need scandium, and MRD holds more of it than anyone.

Our Take on Mount Ridley Mines

We bought MRD at 2.4c in March for the scandium in the clay, and at 4.5c the stock is up about 88% on our entry.

Everything so far has happened in a bath. The bigger bauxite test, which MRD calls separation and purification, needs to turn the metals in the bath into powders someone will buy.

Until MRD can hand someone a bag of alumina and a bag of gallium, Selectro is a set of lab numbers. Even if they’re the best lab numbers we’ve seen from a company this size.

MRD is talking to engineering groups about its demonstration plant, and with three ores tested the plant can run other companies’ ore for prospective licensees as well as Grass Patch clay.

It’s also taking this morning’s result to vanadium and titanium producers, and more outside ores wait for 2027 unless someone makes it worth MRD’s while sooner.

Caird flies to Ankara this week to put Selectro in front of a conference of miners and technology companies from around the world. The organisers are paying his flights, and the vanadium result will be burning a hole in his pocket when he walks in.

MRD wants a royalty on a process running inside other people’s plants. A $63 million company holding the world’s biggest scandium resource and a leach that’s now worked on three ores seems cheap in our book, and this morning it added vanadium and titanium to the list.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club has 2,083,333 performance rights and 303,030 shares in MRD. Equities Club has been engaged by MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

A limestone company drilled them out of a hillside about 140km northeast of Las Vegas in 2009 and 2010, looking for feed for a cement plant. The lab got half of every sample and the other half went into storage.

Sixteen years later the fluorspar and graphite company in our portfolio, Evion Group (ASX: EVG), has signed an option over the hillside. The property is called Blue Nose and it sits 1.2km from Carp, the old fluorspar mine EVG optioned in May. The bags come with it.

The opportunity EVG saw is that nobody ever asked the lab to check for fluorine, which is the element inside fluorspar. They did check for barium, which is often the giveaway for barite, and we wrote in September that barite sat beside the fluorspar in every pit the old miners dug at Carp.

Still with us?

So EVG can read 5,626 barium numbers before it opens a bag and send only the intervals with barite in them back to the lab for fluorine.

The limestone company paid for nine kilometres of drilling in 2009, and EVG gets to go back through it with a lab fee.

At 1.3c EVG is worth about $11 million with $5.7 million in the bank, with three results landing over the next couple of months. Assays on 41 rock chips from Carp are due through November. The drone magnetic survey EVG flew over Carp recently comes back in about a month.

And now EVG gets its first fluorine numbers from the bags in Reno.

There’s a lot of opportunity to re-rate in a commodity that Western countries are desperate to get their hands on.

Round Told Us He Wanted More Nevada

David Round runs EVG, and he told us last month that the company was “not being shy” about Nevada.

Blue Nose is the first piece of ground to land since, and the second EVG has picked up in Nevada this year.

The first was Carp in May, where between 1958 and 1971 the old crew dug 44,900 tonnes of fluorspar out of four shallow pits and trucked it to Kaiser Steel at about 69% purity. The surface samples EVG had verified in May ran as high as 88.15%, which is higher than anything the mine ever sold.

The buyer Round most wants is the US government. The US hasn’t had a working fluorspar mine since 1995 and imports every tonne it uses for a stack of vital jobs, like etching computer chips and making the fuel for nuclear reactors.

Such is its keenness on the commodity, the Pentagon paid US$169 million to get just one old mine in Utah going again in January.

EVG has joined two of the Pentagon’s buying groups this year, meaning it can bid when the next contract comes up. Round has already sat across from senior people at the Department of War with former ambassador to the US Arthur Sinodinos. He told us US industry has written to the government saying it will buy EVG’s product if Washington backs the company.

Here he is on the letters, and on a defence show in Philadelphia where everything on the floor had graphite in it:

We think the bid is a lot easier to make with 829 hectares behind it than with one pit.

Blue Nose and Carp started life as one block. IMC, the limestone company from the intro, staked both in 2008 with the Carp pit in the south-east corner. EVG optioned the Carp end in May and this deal puts the two ends back together. On completion EVG holds 99 claims across the district, up from 59.

To underline his confidence, Round bought a million EVG shares on market at 1.8c in September, while he waits for the lab.

The Bags in Reno

IMC drilled 63 holes into Blue Nose between March 2009 and August 2010, chasing limestone clean enough to feed a cement kiln. All of them went straight down to somewhere between 91 and 305 metres, and the crew bagged a sample every metre and a half on the way.

Two superpowers are in a trade war over critical minerals like this one. IMC drilled nine kilometres through it looking for concrete.

Nobody has ever gone looking for fluorspar on Blue Nose, and the old district records show a handful of small diggings around Blue Nose Peak with fluorite and barite in them. Fluorite is fluorspar by its other name.

EVG’s geologists think Carp and Blue Nose are two levels of the same system, with the fluorspar at Carp formed deeper in the limestone and Blue Nose sitting closer to where the hot fluids reached the surface.

IMC already measured the barium, so we think it’s a fair idea to spend a lab fee on.

The first job is a trip to Reno to go through the bags. The barium sort comes next, and then the fluorine assays on the intervals worth paying for.

We’ve been fooled by a good surface number before, so the result we want is fluorspar in the drill samples at depth, where a lab can’t flatter it.

If it comes back the way the barite suggests, EVG has fluorspar in drill holes at Blue Nose without paying for a rig, 1.2km from a mine that shipped it for 13 years.

Washington has already signed a contract worth up to US$250 million with one old mine in Utah running 60 to 70%. Carp’s surface grades are above 80%, and drilled fluorspar at Blue Nose would give EVG a second deposit to put beside it.

The paperwork for the next step is already half done. The Bureau of Land Management approved a plan for up to 188 holes on the property in 2010, so a rig can go back onto Blue Nose without EVG starting the permit from scratch.

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What EVG is Paying

The deal costs EVG US$1.5 million in cash and four million shares spread over two years, and only US$250,000 and a million of the shares are due at closing. At 1.3c, four million EVG shares are worth about $52,000.

There’s no minimum spend, so EVG decides how much goes into the ground and when. IMC keeps the limestone it came for, and EVG gets the fluorspar, the silver, the gold and the copper.

IMC also gets a slice of Carp. In return for Blue Nose it earns up to a quarter of EVG’s Carp claims, with EVG paying all the exploration bills on IMC’s share until there’s a study a bank would lend against.

If EVG completes the earn-in, it will hold 75% of the non-reserved minerals at Blue Nose, with IMC retaining 25%, giving the two companies a shared interest across the district. We think a quarter of Carp is a fair price for 40 claims and nine kilometres of drilling.

IMC drilled the holes and has minded the bags for 16 years, and a partner with a quarter of the district has a reason to keep helping.

What We’re Watching at Evion Group

The Carp rock chips are due through November and the drone survey a month after, and the survey is what picks the first drill holes there. On Blue Nose, due diligence runs 60 days, and the fluorine assays follow a few weeks after EVG gets into the bags.

The other half of EVG is graphite. Maniry is its mine in southern Madagascar, permitted in July after a four-year wait. In August a German buyer signed for a quarter of its first-stage output, and the full contract is due by February.

Here’s Round on the permit, and why he only sold a quarter of Maniry to the Germans:

The full contract is what Europe’s two development banks want to see before they lend EVG the money to build Maniry.

EVG also owns half a plant near Pune in India called Panthera. It turns flake graphite into the expandable kind that goes into fireproofing, and it sells into the US and Europe. In October it shipped its first container to Vietnam at US$3,650 a tonne.

Panthera ran at about a quarter of capacity last year and still made money.

Take the $5.7 million of cash off the $11 million market cap and the market is paying about $5 million for everything else. We think Maniry and Panthera are worth that on their own, and Nevada comes with them.

Round told us last month the business is in a much stronger position than it was in June, and he expects it to be stronger again by the end of the year. Since June EVG has won the Maniry permits, signed the German buyer, opened a new market in Vietnam, joined two Pentagon buying groups and added 70% to its Nevada ground.

Three results land over the next couple of months, and any one of them can move an $11 million company. Two of them come out of Carp, and the third comes out of a storage facility in Reno.

Where Johnny Cash watched a man die, EVG now has a chance to bring a mine to life.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 4,500,000 EVG shares at the time of publishing this article. Equities Club has been engaged by EVG at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

Point Of Law is the favourite at $6 from gate 9, while the market has the chances of the RBA raising to 4.85% at 95% (about $1.05 on the tote).

You won’t find a bookie that’ll give you odds that short on anything with four legs, making the RBA Tuesday’s shortest-priced favourite.

To be expected after September inflation came in at 4.3% on Wednesday.

Either way, we’ll have the RBA on one screen and Flemington on the other. A rate rise makes every raise at the small end harder, and this week we counted close to 200 juniors that need one before Easter.

Away from the rates decision, our copper pick turned up in our own portfolio, and Elk’s first hole came back better than we hoped.

What caught our eye this week:

• Delegations from Canada to Peru fill IMARC, all hunting the same money

• Bubalus becomes our copper pick just 10km from Mt Lyell

• China pays its biggest copper premium in years

• Elk’s first hole runs 290 metres of gold

• We scanned 700 quarterlies to find 16 companies worth less than their cash position

• Twelve small-cap funds shut but the Small Ords bounces anyway

• Mount Ridley gets flown to Ankara to present Selectro

• A 7c explorer nearly doubles on Namibian gold ground

• DXN loses its first AI customer and Rumble’s study sinks the stock

Let’s get to it.

A Quieter Floor at IMARC

We spent a couple of days on the floor at IMARC in Sydney this week, and we have to admit it felt quieter than the past couple of years.

IMARC is Australia’s biggest mining conference and takes over the convention centre at Darling Harbour for three days, with about 12,000 people through the doors and 500 exhibitors.

Flags filled the floor this year. Canada had a pavilion, so did Germany, France, Sweden and Peru, and every Australian state sent a delegation with a minister or a trade commissioner telling anyone who stopped why their ground is the place to dig.

There’s only so much exploration capital in the world in a year, and the countries are now bidding against each other for the same pot of money.

Last year the chatter on the floor was mostly critical minerals. It was still around this year, but every broker and fund manager we sat down with was hunting a copper project with a path to development.

About 70 small-cap explorers paid for stands and they all know the market is tough, most of the conversations were about spending carefully and keeping the project moving until money flows back.

Plenty of them are pushing a resource forward, while plenty more are in a state of flux, trying to get attention for a project the market has fallen out of love with.

Agnico Eagle’s Australian boss Ion Hann was on the speaker list, but the room was full before we got to the door. Agnico recently paid US$14.8 million for a slice of the ground around Elk Range Mining’s Friday mine in Idaho, and we wanted to hear what it sees in the district.

We came home with a shorter list of companies than last year, but a longer list of countries to run the rule over again.

We’d been looking for the same copper company as everyone else on the floor for months, and this week we found it…

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Bubalus is Our Small-Cap Copper Pick

It was sitting in our own portfolio.

On Monday Bubalus Resources (ASX: BUS) announced a binding deal to buy Skyline, a copper-gold project in western Tasmania 10km from Mt Lyell.

Mt Lyell produced 1.4 million tonnes of copper over a century and then sat idle for 12 years. South African mining giant Sibanye-Stillwater is now spending $490 million to restart it, with first copper due in 2029.

Copper is sitting near the record it set in September, and the big miners are going back over old ground like Mt Lyell because new discoveries have dried up.

We’ve owned BUS since 2025, through a gold drilling program at Avon Plains in Victoria that came back lighter than we wanted. Managing director Brendan Borg spent this year looking for a better project, and our full write-up on what he found is here.

Skyline’s previous owner is a Toronto-listed junior that ran short of money to drill it, and Borg told us what it needed was a well-funded explorer to work out how big the copper system is.

The lead prospect is Jukes, where 13 holes have gone in and all hit copper. The best metre ran 6.28% copper and 12.2 grams of gold, and the copper runs from near surface to about 430 metres down.

Five kilometres south at Hydes the copper sticks out of the ground and nobody has drilled under it yet. Skyline runs 80km along the volcanics Mt Lyell was built on, and Jukes and Hydes are the first two of half a dozen prospects on it.

Borg says the copper at Jukes looks a lot like Mt Lyell’s, and the communities around Queenstown are pro-mining.

Nick Jolly also joined the board with the deal. He ran the geology at Spartan Resources while it found 2.37 million ounces and sold to Ramelius for $2.4 billion, and has put his own money into the raise alongside Borg and the rest of the board.

The drilling permits for Jukes and Hydes are already in place, so once the deal closes in December the focus moves to getting a rig and a crew to site. Borg expects to start at Jukes in January and move to Hydes, and may put a rig on each and run them at the same time.

He told us a five or 10 metre hit at 3 or 4% copper is where the project starts to sing. After a quiet year holding BUS, we’re warming up the vocal cords for the January drill.

China Pays Up for Copper

Chinese importers paid US$205 a tonne above the going London price this week just to get copper delivered to their ports, up from US$145 a week earlier and the most they have paid in 13 years.

Even at that price, the trucks loaded with copper from Rio Tinto’s Oyu Tolgoi mine in Mongolia spent the week queued at the Ganqimaodu border crossing into China. Beijing is upgrading the crossing and fitting facial-recognition cameras inside every truck, and the convoys getting through have dropped from a dozen a day to about four. Oyu Tolgoi’s copper exports are down about 70% in a fortnight.

Part of the rush is Trump. Traders spent this year shipping copper into America before he widens his tariffs to refined metal, and it’s sitting in US warehouses.

China’s stocks are below normal and its smelters have cut output, and one Chinese analyst summed the market up in three words this week: “Sold out everywhere.”

Then on Thursday night Rio paused the underground at Oyu Tolgoi after a tremor on a fault zone hurt three workers, and on Friday it began bringing the mine back up a step at a time. Once the underground is at full tilt it will be one of the biggest copper mines in the world.

Grasberg in Indonesia is the second-biggest copper mine on earth. Its owner Freeport has it running at about two-thirds of its old rate since last year’s mud rush, with full speed due late in 2027.

Those two mines were meant to carry a fair share of the world’s new copper this decade, and a new mine to make up what they’re missing takes 10 to 15 years to permit and build.

BHP’s finance boss sees a lasting copper shortfall from about 2028 and says the world needs another eight to 10 million tonnes a year by the mid-2030s. It’s more than a third of what every mine on earth digs up today.

Forecasts come and go, and we’ve learnt to watch the warehouses more closely than the spreadsheets. For once both point the same way.

The next discoveries will come from juniors, and ours turns a rig at Jukes in January.

Elk’s First Hole Runs 290 Metres of Gold

The lab result we waited 11 weeks on landed on Tuesday morning, with our Idaho gold explorer Elk Range Mining (ASX: ELK) coming out of its halt with 290 metres of gold at 2.8 grams a tonne from 19 metres down.

Plenty of mines make good money on a couple of grams a tonne, and the best 89.6 metres of this hole ran 5.5 grams.

Elk drilled this one down the length of the structure, so the gold is thinner than the metres suggest, and the next seven holes cut across it to measure the thickness a mine can get built on.

Friday is a built and permitted underground gold mine in central Idaho the last owner parked during Covid. The best hole anyone drilled there ran 112 metres at 5.22 grams in 2014 and stopped at 137 metres with gold still in the core.

Elk put its first hole eight metres from it and kept going down. The richest stretch starts at 137 metres, right where the old crew pulled their rods, and runs 11.3 metres at 21.4 grams. The gold kept coming to 309 metres.

CEO Edward Keys told us three of the five spots where the crew photographed gold in the core stayed on Elk’s half when the saw went through, with those trays off to conferences as show pieces.

Around 386 holes have been drilled at Friday over the past century and all of them were reported under an overseas code, so on the ASX they don’t count until Elk’s own core backs them up. This hole is the first to do it.

The shares ran to 24.5c on Tuesday morning, 80% above the halt price, and the sellers spent the rest of the week pushing them back to 14.5c. We haven’t sold a share.

We think the selling is short-sighted. At 14.5c Elk is worth about $18 million, and $6.7 million of it is cash in the bank. The rest buys a built mine with this hole’s gold in it, and the second and third holes are already at the lab with assays due in late November.

We Scanned 700 Quarterlies so you Don’t Have to

Every explorer and early-stage company on the ASX has to lodge a cash report within a month of each quarter ending.

The report says how much cash the company had on September 30 and how many quarters of money it has left at its current rate of spending.

We ran a scan through every one lodged in October by a company worth less than $50 million, and there were close to 700 of them.

Sixteen of them hold more cash in the bank than the whole company is worth on the ASX, and another dozen trade within 20% of their cash. Buy one of the 16 and the business comes for nothing.

We’ve listed them all, thank us later.

At the other end of the list, three in every 10 of the 700 had less than $1 million in the bank on September 30, and half of them had less than $2 million.

The quarterly report also asks each company how long its money lasts at the rate it’s spending. A third said less than six months, and one in six said less than three.

That’s a bit frightening as roughly 200 companies at the small end have to pass the hat before Easter, into a market where trading is thin and an interest rate rise is imminent.

The ones with a decent story will get a placement away at a discount, and the ones who can’t usually go looking for a project to vend in or a cashed-up shell to merge with.

A quarter like this one is when those deals get done, and if you’re one of the 16 sitting on more cash than your company is worth, expect the phone to start ringing.

Twelve Funds Shut, Small-Caps Bounce Anyway

The AFR just counted at least 12 small-cap funds closing their doors in 2026, up from eight last year, and the index they’re all measured against has fallen 16% this year.

For clarity, what a fund manager calls a small-cap and what we call a small-cap are two different animals.

The index is the Small Ords. It takes the 300 biggest companies on the ASX, drops the top 100 and tracks the 200 left over, so it runs from companies worth a few hundred million dollars up to a couple of billion.

The companies we back are usually worth around $10 million to $20 million, and when the Small Ords falls the money leaves the whole small end of the market. An explorer our preferred size feels it long before anything in the index does.

A fund shuts when its clients pull their money out. To pay them back it has to sell every share it owns, and 12 funds doing it in a year is a lot of small-cap shares going out the door at once.

Then in the same week The AFR ran their funeral notices, the Small Ords climbed about 3% off its 52-week low.

When every man and his dog is punting small-caps you’re close to the top, and when the funds are packing up and sentiment is in the bin you’re a lot closer to the bottom than you realise.

We’ve seen a few of these cycles, and the funds shut near the bottom in every one of them.

Mount Ridley Heads to Ankara

The critical minerals explorer in our portfolio Mount Ridley Mines (ASX: MRD) rose 6.7% this week on an invitation.

On Thursday, managing director Allister Caird was asked to present at the International Mineral Exploration Conference in Ankara, Turkey, next week.

MRD built its Selectro leach for the scandium clay at its Grass Patch project near Esperance, and in October it pulled 95% of the gallium out of WA bauxite with the same chemistry.

China refines nearly all the world’s gallium and the chips in American radar run on it, which is why three western governments are paying for a gallium plant at Alcoa’s refinery south of Perth. They desperately need non-Chinese supply.

Caird will put Grass Patch and Selectro in front of a room of miners and technology companies from around the world, and the organisers are paying for the flights and the hotel. They must see something they like.

We’ll catch up with Caird when he’s back.

A 7c Explorer Nearly Doubles on Namibian Gold

It’s not all doom and gloom out there, because the biggest small-cap gainer of the week went from 7c to 13c, up 86%.

A Perth explorer called NGX Limited (ASX: NGX) holds rutile and graphite ground in Malawi, and on Tuesday it bought its way into Namibia’s Damara Belt.

The Damara Belt is a band of gold-bearing country running across central Namibia.

WIA Gold found its 3.78 million ounce Kokoseb deposit there, and Canadian miner B2Gold digs gold from its Otjikoto mine on the same belt.

NGX can earn up to 85% of seven licences covering more than 1,300 square kilometres along the belt. One sits within 10km of Kokoseb, and another is ground B2Gold handed back next to Otjikoto.

It got in for small change, with US$545,000 in cash for the first 51% and the rest paid in stages over seven years as the work gets done. NGX raised $3.6 million on the back of it, and the directors put $540,000 of their own money in.

Nobody has drilled a hole on the new ground yet. NGX starts with soil sampling along the faults the belt’s gold sits on, and at 13c the whole company is worth about $11 million.

Buyers paid up for 1,300 square kilometres next to a 3.78 million ounce discovery, and NGX got in for under $1 million up front.

There are still winners out there.

A Brutal Week for Two Small-Caps

DXN (ASX: DXN) builds data centres in modules at a factory in Welshpool. In June it signed an $8.8 million contract to build an AI data centre for a US-listed cloud company, and we wrote about it when the shares ran 775% in a week.

On Friday DXN said the customer intends to cancel the contract after a change of strategy.

DXN expects to be paid about $4.2 million for the work it has done and the parts it has ordered, but the bigger campus the contract was meant to lead to looks unlikely.

The shares fell from 26.5c to 14c on Friday.

Rumble Resources (ASX: RTR) owns the Western Queen gold project in WA, and on Tuesday night it put out the study it had told the market all year would lead to a mine decision before Christmas.

Rumble plans to dig about 125,000 ounces over four years and truck every tonne 185km to another company’s mill, at a cost of A$4,390 an ounce. The study assumes gold at A$5,714, so each ounce clears about A$1,300 before tax.

Rumble has been hitting high-grade tungsten alongside the gold at Western Queen all year, and the study leaves it out, so the feasibility work has to be redone to fit the tungsten in.

The mine decision has no date on it and the money to build the mine is still to be found.

By Wednesday’s close the shares were down 37.5%, from a company worth $53 million at the start of the week.

Holders waited a year for a date and got another study.

The Week Ahead

We’ll put down the pens for a pint straight after the RBA’s decision on Tuesday and watch the race with the rest of the country.

Tuesday is also midterm election day in America, and the bookies have the Republicans at around $3 to hold the Senate and $8 or more to hold the House. A double loss would tie Trump’s hands on the AI and resources push Wall Street has been running on, and Bank of America thinks US stocks could fall more than 10% on it. As with most things Trump and US politics, expect some drama.

We’re still busy here at Equities Club. We’ve met plenty of boards in the past few weeks who want to be in front of investors when the market turns, which tells us they can see the light, and our job is to work out which of them we’d back.

Good luck on Tuesday. We hope you back a winner at longer odds than the Reserve Bank.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares, 2,083,333 MRD performance rights and 303,030 MRD shares, and 600,000 BUS Shares at the time of publishing this article. Equities Club has been engaged by BUS, MRD, and ELK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services Licence (AFSL) No 519872.

The copper came out of Mt Lyell, which opened in 1893 and went on to produce more than 1.4 million tonnes of it along with 50 tonnes of gold. Three workers died there within six weeks over the summer of 2013 and 2014, and the mine went quiet.

Copper hit an all-time high last month, and the big miners are going back through old ground like Queenstown looking for more of it. South African miner Sibanye-Stillwater paid US$10 million for Mt Lyell in 2023, and on September 2 it approved a $490 million restart with first copper due in early 2029.

About 10km from Mt Lyell, on the same belt of ancient volcanics, sits a copper-gold project called Skyline, and on Monday Bubalus Resources (ASX: BUS) signed a binding deal to buy it.

Its lead prospect is called Jukes. Every hole drilled into it has hit copper, 13 from 13, and BUS is paying $1 million in cash and $2 million in shares for the lot.

We’ve owned BUS since 2025, through a gold drilling program at Avon Plains in Victoria that came back lighter than any of us wanted. Managing director Brendan Borg spent this year scouring the globe for a better project, and we think he’s found one.

Skyline spent the past year inside a Toronto-listed company that ran short of money to drill it. Borg says a Tasmanian copper project inside a Canadian company was never ideal, and bringing it onto the ASX will get more value out of it.

We’re copper bulls, and we’ve spent months looking for a small-cap with real copper in the ground and a share price that hasn’t caught up. At 8.3c, BUS is it.

Borg has also brought geologist Nick Jolly onto the board. Jolly ran the geology at Spartan Resources while it found 2.37 million ounces of gold at Never Never and Pepper in WA. Ramelius paid $2.4 billion for Spartan last year.

Jolly had a proper look at the core and liked the ground, and he’s putting his own money into the raise alongside Borg and the rest of the board months before the first hole.

What Bubalus is Buying

We built a flyover of the ground so you can get a visual, from Skyline’s five licences along the Mount Read Volcanics to Mt Lyell about 10km up the road.

Skyline covers 494 square kilometres of western Tasmania with about 80km of strike, which is the length of prospective ground a geologist can follow across the map.

The ground sits across five granted exploration licences, with Jukes and Hydes the two prospects BUS will drill first.

At Jukes, the most advanced of them, drilling has traced copper from near surface down to about 430 metres, and the system stays open along strike and at depth.

Borg says the copper at Jukes is very similar in style to Mt Lyell’s, and the grades so far are comparable.

About 5km south at Hydes, copper sits at surface on top of a dense, magnetic body underground. The one hole drilled there started 400 metres from the outcrop because the crew couldn’t get access at the time, and it never reached the target.

Behind those two sit half a dozen more prospects with copper at surface or in a handful of old drill holes.

Four other mines work in the district, and the roads and hydro power are already there. The drilling approvals for Jukes and Hydes are in place too, so once the deal completes attention turns to getting a rig and a crew to site.

At 8.3c a share, BUS comes out of the deal and its capital raise worth about $11 million, with around $4.8 million in the bank. Close to half the company is cash, and the rest buys Skyline, 10km down the road from a mine getting half a billion dollars spent on it.

Mt Lyell Comes Back to Life

After 12 years sat idle, the copper mine 10km from Jukes is getting $490 million poured into it by mining giant Sibanye-Stillwater. Most of it is for a new processing plant and a refurbished shaft.

Sibanye mines platinum and gold for a living, and it’s spending half a billion dollars on an old Tasmanian copper mine. A new one takes more than 10 years to permit and build. Mt Lyell has the shaft and the town already.

Once it’s running, Mt Lyell plans to produce 26,000 tonnes of copper a year, with gold and silver on the side, all on hydro power, for 23 years.

The Tasmanian Government put in $9.5 million for early works and has a $25 million package lined up once mining starts. About 300 jobs come with it.

Mt Lyell’s general manager Clint Mayes told reporters on announcement day the rising copper price was “a nice sweetener”, and that Sibanye made the call on long-term demand. He’d always believed the mine would reopen. “There’s too much metal in the ground for it not to.”

Tasmania’s Resources Minister Felix Ellis was a plumber on the west coast when the mine shut, and he got emotional in front of the cameras on announcement day. Plenty of Tasmanians who started out at Mt Lyell are now working mines around the world, he said, and he’s looking forward to welcoming them back.

A $490 million mine next door is as good as it gets for an $11 million explorer. A major will run a mill 10km from Jukes for the next two decades, and the crews Ellis wants home will be living down the road.

Copper’s Record Price Run Set to Continue

Copper set a record of US$14,875 a tonne in London on September 10, and later in the month closed at a record US$6.92 a pound in New York. It sits a few hundred dollars under the record as we write, and we think the run has further to go.

Copper held in London Metal Exchange warehouses fell 38% between April and late September as buyers in the US and China stockpiled it, and global mine output fell in the first half of the year.

In Chile, supervisors at BHP’s Escondida, the biggest copper mine on earth, voted 95% for a strike on September 30. There’s so little copper to spare that BHP paid up within a fortnight to keep them at work.

Even Mt Lyell, with the shaft already sunk and the money approved, pours its first copper in 2029.

The big miners are going back over old ground because the new discoveries have dried up. S&P Global went through the world’s copper finds this month and more than 60% of the copper added in the past year came from stretching out mines already running.

Grassroots exploration got a quarter of last year’s copper exploration budget, and the mine-site programs got 43%.

Which leaves the finding to the juniors like BUS.

Demand keeps climbing from power grids and the data centres the tech giants are racing to build, and the switch to electric cars and renewable power comes on top of it.

We’re bullish copper, but we like to leave price calls to the investment banks. Deutsche Bank’s head of metals research Daniel Ghali told the Wall Street Journal last month he expects copper to reach US$10 a pound by the middle of 2027.

That’s about US$22,050 a tonne, nearly 50% above where copper traded when he made the call. Ghali thinks stockpiling by the US and China could lock up about 71% of the world’s above-ground copper by the end of this year.

Citi called for US$15,000 a tonne within 12 months back in June, and copper has spent the months since closing in on it. Research house BMI sees US$17,000 a tonne within the decade as the energy transition eats into supply.

Every tonne a junior finds from here is worth more than it was a year ago.

BUS has 13 holes of confirmed copper at Jukes already and a rig a few months away. Borg says a five or 10-metre hit at 3 or 4% copper is where Jukes starts to sing.

Five Reasons We’re Backing Bubalus Resources

1. Every Hole at Jukes Hit Copper

Jukes is the most advanced prospect at Skyline, and it’s where BUS takes the rig first.

Earlier explorers put five holes into Jukes, and the previous owner came back in 2024 and drilled eight more, plus a wedge. A wedge is a branch drilled off an existing hole to reach a new target without starting again from the surface.

All 13 hit copper (plus the wedge hole).

The best metre on the project came out of a later hole, 205 metres down, running 6.28% copper and 12.2g/t gold inside 13 metres at 1.18% copper and 1.14g/t gold. Another hole cut a metre at 6.95% copper.

The first hole cut 132 metres at 0.35% copper and 0.19g/t gold from 72 metres down, and the wedge hit 50 metres at 0.66% copper and 0.27g/t gold from 498 metres, with 2.05 metres at 4.20% copper inside it.

An old hole from the days before the previous owner cut 13.4 metres at 1.60% copper and 1.60g/t gold from 62 metres.

Between them they’ve outlined a broad copper-gold system with several richer zones running through it. The copper starts near surface and runs to about 430 metres below it, over at least 350 metres along strike, and it’s open in both directions and at depth.

For anyone new to copper grades, 0.35% copper means 3.5kg of copper in every tonne of rock. Some of the biggest copper mines on earth make their money on grades like it.

Newmont’s Cadia in NSW digs ore running well under half a per cent copper with gold on top, and Jukes carries gold alongside its copper too.

The copper at Jukes is chalcopyrite, a brassy copper-iron sulphide that’s easy to spot in the core. The photos in BUS’ announcement show it sitting in coarse veins through the volcanics.

The geologists read Jukes as an iron-oxide copper-gold system, the same family as BHP’s Olympic Dam, with features of a porphyry, the big low-grade systems that grow around granite intrusions. Both styles can grow into giant deposits.

Borg’s first job is finding out how far the richer zones run. The wedge is the only hole in its part of the system and it’s open in every direction, so it’s where BUS goes first.

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2. Hydes Has Copper at Surface and an Untested Target Below

Hydes sits about 5km south of Jukes and is the other prospect BUS plans to drill in its first year.

At Hydes the copper is sticking out of the ground, and the one hole the previous owner drilled beneath it started 400 metres away and never reached the target zone.

The previous owner’s crew sawed a continuous channel across the outcrop and sampled every metre of it. It came back at 24 metres of 0.74% copper and 0.36g/t gold, including 14 metres at 0.97% copper and 0.56g/t gold.

A channel is one continuous cut through the whole outcrop, so the grade is an honest average of the lot. Borg says they’re similar to the grades Mt Lyell mines.

Directly underneath sit gravity and magnetic anomalies, patches of ground denser and more magnetic than everything around them. Iron-oxide copper systems carry plenty of magnetite and other heavy minerals, so geophysicists go looking for this pattern.

The permits now let BUS drill right under the outcrop.

If the first few holes land, Skyline goes from one copper system to two.

3. 80km of Strike in Tasmania’s Mining Heartland

Skyline runs along the eastern edge of the Mount Read Volcanics, a belt of ancient volcanics that has fed western Tasmania’s mines for more than a century, with Mt Lyell among them.

Jukes and Hydes get the rig first, and behind them BUS picks up a pipeline of prospects thrown into the deal, with South Darwin the pick of them.

Explorers drilled three holes there in 2011 and 2012 and hit 124 metres at 0.40% copper and 0.12g/t gold, in the same iron-rich copper style as Jukes, plus a separate 13 metres at 1.2% copper and 0.45g/t gold.

Drilling at South Darwin also hit rare earths, including 72 metres at 1.13% total rare earth oxides with 30 metres at 2.26% inside it. As our regular readers know, rare earths go into the magnets in electric cars and wind turbines, and China controls most of the world’s supply.

BUS gets the rare earths on top of the copper, and it plans to re-log the old core and build a 3D model of South Darwin before drilling it again.

Half a dozen more prospects sit along the rest of the strike, with copper at surface or buried geophysical targets and little modern drilling between them. One of them (Linda) sits right beside Mt Lyell.

BUS plans to rank them with mapping and fresh work on the old geophysics, then drill where the signals stack up. For an $11 million company, it’s a lot of ground in reserve behind Jukes and Hydes.

4. A Copper Project for $1 Million Cash

For a drill-confirmed copper project 10km from Mt Lyell, $1 million in cash is a steal.

The previous owner wanted to keep a stake, so the rest of the upfront price is at least $2 million in BUS shares, topped up so the vendor lands on 19.95% of the company.

The vendor’s shares come out of escrow a quarter at a time, at completion and then at three, six and nine months after it, so it still holds most of its stake while the first holes go in.

Another $1.5 million only gets paid if BUS proves up a JORC resource of 200,000 tonnes of copper equivalent within five years. For scale, 200,000 tonnes is close to eight years of Mt Lyell’s planned output, and if BUS gets there, shareholders will be happy to pay it.

The previous owner’s CEO stays on as a consultant for six months, and the vendor gets to nominate a director while it holds more than 10% of BUS. BUS plans to keep the Tasmanian exploration crew too, so the people who drilled Jukes stay with the project.

BUS is raising $3 million to close the deal, with the directors and Jolly putting their own money in, and comes out the other side with around $4.8 million in the bank. The first $2.5 million of it goes into Skyline over 12 months, most of it on 4,000 metres of drilling at Jukes and Hydes.

Sibanye paid US$10 million for Mt Lyell with copper at US$8,000 a tonne. It’s over US$14,000 now, and BUS is paying $3 million up front for ground 10km away. The potential upside from here is big in our eyes.

5. A Board Built to Find Gold and Copper

Nick Jolly you’ve already met, and his last two stops ended in a multibillion dollar takeover and an 18 bagger high point.

Spartan was a $2.4 billion takeover, with Jolly running the geology and signing off on the ounces that got Ramelius to pay up.

Jolly joined the Benz Mining board in January last year, the day it completed the Glenburgh purchase in WA, when Benz was a 30c stock. Benz hit gold at Glenburgh, the shares hit a high of $5.56 last month, Benz is now in the ASX 300.

One discovery did all of it, and it’s why we buy explorers before the first hole goes in.

Before them he held management roles at Northern Star, Australia’s biggest gold miner. Jolly will give BUS proven technical advice on top of his board seat.

He joins Brendan Borg, who moves up from managing director to executive chair as Alec Pismiris retires from the board.

Borg has more than 25 years in exploration and mining, and sat on the Leo Lithium board when it sold its remaining 40% of the Goulamina lithium mine in Mali to Ganfeng for US$342.7 million.

When the Avon Plains results came back light earlier this year, Borg bought 200,000 BUS shares on market with his own money. We liked seeing it then, and we like it more now.

What Could Go Wrong

Every result in this article comes from the previous owner or earlier explorers, and BUS still has to drill it into a JORC resource (the industry’s audited count of what’s in the ground).

Western Tasmania is steep, wet country that’s hard to work in, and iron-oxide copper systems can sit deep. As drilling can be expensive, BUS will need to raise more money at some point in the future, and we’d hope at a much higher price.

We’ve weighed all of it against copper near record highs and a board with a proper discovery record, and we’re happy holding BUS through the drilling.

What We’re Watching

• Completion of the Skyline deal, targeted for December

• The rig turning at Jukes in January

• Geophysics at Hydes, then the first three or four holes into it

• Mapping and geophysics across the rest of the 80km of strike

• First assays from the BUS drilling

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The Bottom Line

The hills around Queenstown have been orange for a century because of what’s under them, and in 2029 Sibanye starts digging it out again.

The local Resources Minister Felix Ellis wants the miners who left town to come home for it. Some of them might find work 10km down the road at Jukes first.

Copper is near the highest price it has ever traded and the banks see it going higher. BUS has copper in all 13 holes drilled there and a rig a few months off.

At 8.3c, with half the company in cash, you’re paying about $5 million for Skyline before a single BUS hole goes in.

The geologist who just joined the board took his last junior from 30c to $5.56, and Borg bought BUS shares with his own money on the worst day the stock had this year.

Mt Lyell sat shut for 12 years with too much metal in the ground to stay that way.

Ten kilometres away, BUS gets its first look at how much copper is in Jukes this summer, and we’d rather be in before the rig is.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 600,000 BUS shares at the time of publishing this article. Equities Club has been engaged by BUS at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

Eleven weeks ago we wrote that a drill hole at Friday ended in 133 grams a tonne more than a decade ago, and ELK had just gone back for it.

It found 11 metres at 21 grams sitting straight underneath, and the gold kept going for another 170 metres.

The 2014 hole averaged 5.22 grams over 112 metres, and the 133 was the last three-quarters of a metre before the rods stopped at 137 metres.

Nobody drilled under it for 12 years.

Elk drilled its hole eight metres away, ran it through the same ground and kept going.

“Every investor looking at an old mine asks the same question: did the gold stop where the drilling stopped?” CEO Edward Keys said. “This hole answers it.”

Keys told us the first thing he looked for when the assays landed was the gold the crew had photographed in the core at five depths back in September and October. Three of the five stayed on Elk’s side when the saw went through, so those trays are off to conferences as show pieces.

The lab’s half from 122 metres ran 268 grams a tonne over 30 centimetres.

“We’re talking bonanza grades,” he told us.

For anyone new to gold grades, plenty of mines make good money on a couple of grams a tonne. This hole averaged 2.8 across 290 metres, and the best stretch of it ran more than seven times that.

Friday is the permitted underground mine the last owner spent more than US$40 million building, then parked during Covid with gold at US$1,887. Gold’s above US$4,000 now, and Elk is drilling the same ground with the decline and the mill already paid for.

ELK went into its trading halt at 13.5c. At that price it’s a $17 million company with $6.7 million in the bank at the end of September, so the market was paying about $10 million for the mine the day before this hole came back.

A $17 million explorer carrying this hole and the money to drill seven more looks cheap to us. The rig is already on the second pad with two holes underway, and their assays land in late November.

The First Hole, Zone by Zone

The hole hit gold 19 metres below the surface and stayed in it, with a few lean patches, all the way to 309 metres. Elk counts the lot as one stretch of 290 metres at 2.8 grams a tonne.

The top 53 metres are serviceable at 1.9 grams, with 20 metres at 2.6 grams and a seven-metre run at 4.5 grams inside them. Plenty of mines globally operate at those grades.

From 77 metres the hole gets serious.

It runs 89.6 metres at 5.5 grams, and inside it sit 13.9 metres at 9.7 grams from 112 metres and 37.1 metres at 8.3 grams from 129 metres.

The richest stretch of the hole begins at 137 metres, the depth where the old crew pulled their rods out, and runs 11.3 metres at 21.4 grams. Nobody had drilled a metre of it before.

Below it the gold keeps coming. From 177 metres the hole ran 12.7 metres at 4.5 grams, with three metres at 13.4 grams in the middle of it. From 216 metres it ran 51.8 metres at 2.6 grams, and 22.4 metres of those averaged 5.1.

The last 36 metres of gold thin out to 0.8 grams, the gold stops at 309 metres and the hole finishes at 337.

Geologists multiply length by grade to rank holes, and this one comes to about 820 gram-metres from the first gold to the last.

Keys called it “an incredible way to start Elk Range”.

The lab also put a number on each of the five places the crew saw gold in the core. Beyond the 268 grams at 122 metres, the veinlet at 234 metres, the one longer than a centimetre in the Tray 65 photo, ran 120 grams over 39 centimetres, and the three sightings in between came in at 5.4, 2.6 and 6.1 grams.

The core also came up with a line marked down its side the whole way, so the geologists know which way every vein in it runs. It’s the first oriented core anyone has pulled at Friday.

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Elk Drills Down the Guts

Elk pointed its first hole along the shear zone (the crack in the hill the gold lives in) and drilled right down the guts of it.

Drill down the length of a vein and you get a long number. Drill across it and you get its thickness, which is the number a mine gets built on.

Elk’s 290 metres is the long way, so the gold is thinner than the lengths above say.

Keys told us the first hole was always going to go in this way, because this slice of the hill had few old holes in it and Elk wanted a look down the whole structure before cutting across it. The next seven holes come across the zone to measure how thick it is.

Elk’s hole went through the same zone the 2014 hole did and came out the other side with 89.6 metres at 5.5 grams.

What the Result Does for ELK

Around 386 holes have been drilled at Friday over the past century, all of them reported under an overseas code, so on the ASX they count for nothing until Elk’s own core backs them up.

The best of the lot now has Elk’s hole eight metres from it, through the same zone and 170 metres further down.

ELK drifted from 20c to 13.5c while the core sat at the lab. We held every share, because the stock was always going to be judged on this hole.

Keys has done what he told us he’d do in August, putting the first hole straight under the old one and running the rig day and night to get the core to the lab.

He spent last night in a hotel room in Boise, Idaho, with a presentation at the Idaho minerals conference two days away and a week of Melbourne investor rooms behind him.

As we’ve written before, Keys keeps a sleeping bag on the mill floor at Friday, so a hotel room counts as a rare night off.

“We’re not sitting on our hands at Elk Range,” he said. “Morale is good out there. We’re kind of having fun doing it, seeing all this gold.”

The gold at Friday is nuggety, and one hole tests one slice of a system 430 metres long, so the size of Friday rests on the next seven holes.

Leanne Kite bought 250,000 shares on market in the first week at 19c, and three more directors bought after her. We like a board with its own money in at the price we paid.

Next Steps for Elk Range Mining

The rig has moved to the second pad, where the second hole stopped at 151 metres for a mechanical fix and the crew turned the rig to start the third, which is 125 metres down with 396 planned.

Core from both goes to the lab in the coming days, and Elk expects assays in late November.

Elk also sent the old 2014 core back for a photon assay, the bigger test we wrote about in September, and the lab still has it.

Elk’s eight-hole program is aimed at a maiden JORC resource for Friday, the first time anyone has counted the gold in this hill to the Australian standard.

We wrote in August that a century of Americans proved the gold is there, and a team of Australians would find out how much. The first Australian hole went 170 metres past where the Americans stopped, and the rig is already in the next one.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares at the time of publishing this article. Equities Club has been engaged by ELK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

Nine years later the power storage scheme sits unfinished and the bill has grown more than 12 times, with Snowy Hydro, the government company building it, now putting the cost at up to $25 billion.

It’s the latest in a long line of government bin fires, with French submarines, Comm Games, the Big Build and Inland Rail among the ones stoking the flames before it.

As Reagan once said, a government bureau is the nearest thing to eternal life we’ll ever see.

In Melbourne’s west, NextDC lived through the power shortage Mark Zuckerberg and Anthropic have both warned about, losing about $3 billion of value in a day after locals blocked the power poles its data centre needs. More on that below.

Our Idaho gold explorer Elk Range has a shorter wait than nine years. It went into a trading halt on Friday for the assays from its first hole and we find out the grade this coming week.

What caught our eye this week:

• Elk halts for the first grade from its hole beside the old 112 metre hit

• Copper in FMR’s first Chilean hole and a new high for the shares

• MRD pulls 95% of the gallium out of WA bauxite

• Adisyn hires the man who ran Tower’s chip factories

• Fortuna maps Mkanda from the air with $12.8 million in the bank

• NextDC loses $3 billion in a day over power poles in Melbourne’s west

• Hawk’s first lab assays land 60 times under the handheld readings

• Evion maps the faults under its old Nevada fluorspar mine

• 10X’s copper corridor at Watsons grows to 3km

Let’s get to it.

Elk Range Halts for Its First Grade

Our Idaho gold explorer Elk Range Mining (ASX: ELK) asked for a trading halt on Friday with the assays from its first hole at the Friday gold mine on the way.

The halt came at 13.5c, which values Elk at about $17 million.

Friday is a built and permitted underground gold mine in central Idaho the last owner parked during Covid.

The best hole anyone drilled there ran 112 metres at 5.22 grams of gold a tonne in 2014, and the crew stopped it at 137 metres with gold still in the core.

Elk put its first hole eight metres from it and kept going 200 metres past where the old crew stopped. The geologists logged visible gold at five depths on the way down, as deep as 234 metres.

We wrote last week that US$100 billion gold major Agnico Eagle paid US$14.8 million for a slice of the ground around Friday.

When Elk listed in August we said the ground below the old hole was why we bought it. The assays are due by Tuesday’s open.

FMR Finds Copper and Hits a New High

We called copper explorer FMR Resources (ASX: FMR) at 16c last year, and this week it hit an all-time high of 71c after its first hole at La Lorena in Chile came up with copper in the core.

La Lorena sits on the same structure as Antofagasta’s Los Pelambres, one of the biggest copper mines in Chile. Locals once dug copper out of the hills there by hand, and rock chips from their old workings ran up to 5.32% copper.

A rock chip is the best-looking piece of rock a geologist can find on the surface, and the drill hole is the first look at what sits under the workings.

The first diamond hole under the old workings logged copper minerals across several structures and reached the edge of a porphyry. Porphyries are the giant copper systems most of Chile’s big mines are built on.

The assays are due in four to six weeks.

A run from 16c to 71c in a tough market is why we get into explorers early.

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MRD Gets 95% of the Gallium

China refines 99% of the world’s gallium, and the chips inside American radar run on it. Beijing banned gallium exports to the US in December 2024, so Washington is paying for a plant at Alcoa’s Wagerup refinery south of Perth to pull gallium out of WA bauxite. Japan and Canberra are chipping money in too.

Alcoa’s plant will get at about 70% of the gallium in the bauxite.

On Wednesday the critical minerals explorer in our portfolio Mount Ridley Mines (ASX: MRD) said its Selectro leach got 95% out of the same bauxite in a lab on its first go.

The three governments paying for Alcoa’s plant should be reading our full write-up on the gallium result, which is here.

Selectro is the leach MRD built for the scandium clay at its Grass Patch project near Esperance. It pulled the aluminium and the iron out of the same bauxite a week earlier, and what it left behind was a pile of sand, compared to a dam of caustic red mud that a refinery leaves.

Beijing paused its ban for a year last November. The pause runs out on November 27, and if China lets it lapse the ban is back on.

MRD wants to make its money inside other people’s refineries. It lodged a patent on the bauxite chemistry last week and wants to license Selectro to the refiners who own the bauxite, so the refiner would do the digging and the refining and MRD would get paid every time its chemistry ran.

A second bauxite test is under way, and MRD has pulled forward a demonstration plant in Perth to run the process in bulk.

The shares ran as high as 5.4c on Wednesday and finished the week at 4.2c. We bought MRD at 2.4c in March for the scandium in the clay, and Selectro has beaten our expectations four announcements in a row. The company is worth about $60 million today.

Adisyn Hires the Man Who Ran Tower’s Factories

For 20 years Ephraim Koltin was the man a materials company had to convince before its process got anywhere near a chip production line at Tower Semiconductor.

On Tuesday Adisyn (ASX: AI1) hired him to go and do the convincing.

Tower is a US$22 billion chipmaker, and Koltin ran every factory it owned in Israel, Japan and the US with 2,700 staff reporting to him.

AI1’s subsidiary 2D Generation grows graphene inside the same machines Tower runs, and Koltin is its incoming CEO.

Our article on the hire is here.

The chips in phones and AI servers are wired with copper tracks called interconnects, and below two nanometres the copper runs hot and chokes.

Graphene is a sheet of carbon one atom thick, and a chip wired in it runs faster and cooler on less power.

Across a data centre full of AI chips, the electricity lost to hot copper adds up to a small city’s power bill.

Koltin’s job from day one is to get AI1’s wafer results in front of the chipmakers and sign the first one to a binding deal.

Of his 10 million performance rights, 8.5 million are worth nothing until AI1 holds 34c, which is more than four times today’s price. Another lot only pays once two contracts with people he introduced are worth US$1 million between them.

The board has basically written his list of contacts into his pay.

A heavy hitter taking the job at a $92 million company is the biggest vote of confidence in the graphene we’ve had yet.

AI1 finished the week at 7.8c with about $15 million in the bank, and we’re sitting down with Koltin in the coming weeks.

Fortuna Maps Mkanda From the Air

Rutile explorer Fortuna Metals (ASX: FUN) has a drone with a laser scanner flying over 180 square kilometres of Malawi farmland this week, mapping the ground around its Mkanda project to the metre.

Mkanda holds 298 million tonnes at 0.87% rutile, and all of it sits in the top eight metres of soil. When the ore is that shallow, knowing where the surface is to the metre decides how many tonnes go into the resource.

FUN needs the map to lift the resource from inferred to indicated before its pre-feasibility study starts in December.

A fortnight ago FUN drilled below eight metres for the first time and the rutile kept going.

The survey will be done by the end of October, and the next aircore assays from the Kahuna and Agogo prospects land shortly after. Hand augers are also drilling the first 66 holes at Kampini, FUN’s second tenement, along 50km of the same rutile trend.

FUN had $12.8 million in the bank at the end of July, so all of it gets paid for without a raise.

FUN slid from 8c to 6.6c this week in thin trade and is worth about $28 million.

We’ve backed FUN since it was 4c last September. At $28 million for one of the six biggest rutile deposits in the world, with $12.8 million in the bank and a study starting in December, we think the slide is the market and the project keeps getting better.

NextDC Loses $3 Billion in a Day

We were escorted through one of NextDC’s Perth data centres a few years back for a look around. The security was tighter than anything we’d been through. The room at the end was spotless and white and full of racks, and in the pre-AI era it just looked like a very expensive place to keep other people’s hard drives.

NextDC (ASX: NXT) is the biggest data centre company on the ASX, and its M3 campus in West Footscray needs more power from the grid to keep growing.

The extra power needs taller poles down the streets of Yarraville and West Footscray, and the locals didn’t want them outside their houses. The power company stopped putting them up in September and won’t start again before February.

NextDC came out of a trading halt on Wednesday and cut next year’s earnings guidance from up to $410 million to at most $265 million.

The shares closed at $5.35 on Wednesday, down 42% and their lowest since 2018. They finished the week at $5.61 and have now fallen eight weeks in a row.

Mark Zuckerberg said on a podcast a couple of years ago that Meta would probably build bigger data centres than it can now if it could get the energy to do it.

Last week Microsoft walked away from a data centre in England because the grid can’t feed it until the 2030s. Anthropic listed community opposition to data centres as a risk to its business in the draft IPO prospectus reported this week.

Morgans upgraded NextDC to a buy on Thursday at $7.50, about what its buildings are worth on paper.

Hawk Falls 70% on Its First Lab Numbers

A scandium explorer lost 70% of its value on Friday when its first lab assays came back a long way under the handheld readings it bought the project on.

Hawk Resources (ASX: HWK) holds a 7km by 4km patch of WA’s West Musgrave called Olympus. A handheld analyser is a screening tool a geologist points at dirt in the field, and old readings from one ran above 500 parts per million scandium at Olympus.

The first batch of soil samples through a lab topped out at 11.2.

Hawk closed at 2.7c on Thursday and got smashed down to 0.8c on Friday.

The readings were 20 years old and came from another explorer, and it’s a tough road back for holders from here.

Evion Maps the Faults Under Carp

Carp is a fluorspar mine in Nevada the previous owners dug 44,900 tonnes out of between 1958 and 1971, and the ground under the old pits has never been drilled.

The graphite and fluorspar company in our portfolio Evion Group (ASX: EVG) has the right to buy Carp, and this week it flew a drone with a magnetometer over the whole claim.

Fluorspar is where the fluorine in refrigerants and lithium battery electrolyte comes from, and the US imports nearly all of it.

A magnetometer reads the magnetism in the rock below, and a fault shows up as a break in it. EVG will use the survey to find the faults the fluorspar sits along and place its first drill holes there.

The data lands in about a month, and assays on 41 hand-picked rock chips are due through November.

At 1.3c EVG is worth about $11 million with $5.7 million cash at bank, and we like a company that maps its faults before it spends a dollar on a drill rig.

Exultant’s Copper Corridor Grows to 3km

The smallest company in our portfolio made its copper corridor 600 metres longer this week, and all it took was the landholder to the south signing an access agreement.

We wrote last week that Exultant Mining (ASX: 10X) had gone back over a 2.4km line of 1970s copper and zinc soil readings at Watsons.

Watsons sits inside Black Hammer, 10X’s copper-gold project three hours west of Sydney in the same belt as Newmont’s Cadia mine.

Exploration manager Seb Hind’s crew took 99 more readings with the handheld analyser, and the corridor now runs 3km. They found where it ends in the south and it’s still running in the north. The best new reading was 173 parts per million copper and 255 zinc.

Next 10X pushes the grid northeast and looks at ground geophysics to pick the first hole at Watsons.

Executive chairman Brett Grosvenor calls it two phases of cheap soil work turning a 1970s anomaly into a 3km target.

10X is worth under $5 million at 12c with about $2.8 million in cash, and from a company that size, cheap is a word we want to hear.

The Week Ahead

Elk comes out of its trading halt this week, and we haven’t waited on a lab result like this in a long while.

We’ll be at IMARC in Sydney from Tuesday to Thursday with about 12,000 people from the mining game. Will report back.

Agnico Eagle’s vice president of Australian operations Ion Hann is on the speaker list, and after his company’s deal next door to Elk we’ll be in the front row when he speaks.

The data centres we opened on turned up in the Reserve Bank’s thinking on Wednesday, when deputy governor Andrew Hauser said the inflation outlook has got materially worse and named the data centre boom as one of the reasons.

Inflation numbers land on Wednesday morning and the RBA decides on rates on Melbourne Cup day, with two of the big four banks tipping a rise. A rise makes every capital raise at our end of the market harder.

Every junior on the ASX has to put out its quarterly by Friday, with how much cash it had on September 30 and how fast it’s spending it. After a quarter like this one, we’ll be reading the cash line before anything else.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares, 1,554,000 FUN shares, 200,000 10X shares, 4,500,000 EVG shares, 2,083,333 MRD performance rights and 303,030 MRD shares, and 900,000 AI1 performance rights at the time of publishing this article. Equities Club has been engaged by AI1, 10X, MRD, FUN, EVG and ELK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services Licence (AFSL) No 519872.

When it runs it could supply up to 10% of the world’s gallium.

This morning, Mount Ridley Mines (ASX: MRD) reported its Selectro leach got 95% of the gallium out of a sample of the same Darling Range bauxite Alcoa refines.

Selectro is a leach MRD built to get scandium and rare earths out of its clay at Grass Patch near Esperance. Last week MRD ran bauxite through it for the first time and reported 92% of the aluminium and 97% of the iron came out.

The gallium from the same test needed a more sensitive assay and took another week.

Selectro recovered more than 91% of the gallium, the aluminium and the iron in one leach below the boiling point of water, and all it left behind was a pile of sand.

China refines 99% of the world’s gallium. Washington’s own geologists say many defence applications have no substitute for a gallium chip, and a full Chinese ban on exporting it would cost the American economy between US$3.4 billion and US$9 billion.

The Pentagon is basically using some military equipment with a metal it can’t buy from the only country making it.

Three governments are paying for Alcoa’s plant to get at 70% of the gallium in bauxite. MRD got 95% in a lab, and we’d say the same three governments should be reading this announcement.

Mount Ridley and the Metal the Pentagon Can’t Buy

Gallium chips handle more heat and more power than silicon ones. They go into military radar and electronic warfare systems and into the electronics inside AI data centres and electric cars.

The market for the data centre chips alone is growing 35% a year and will be worth US$3.5 billion by 2031.

America makes no gallium of its own and imports every kilo it uses.

In December ‘24 China banned gallium exports to the US. Last November, as part of the one-year trade truce Trump and Xi struck, Beijing paused the ban until November 27 this year. It hasn’t said what happens after that.

Every shipment of gallium leaving China has needed a government export licence since 2023. The ban on selling to the US military was kept in place as well, so barely anything is getting through.

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The News is Flowing

Last Wednesday’s aluminium result put 20% on the stock by Friday. Monday brought a second patent on the bauxite chemistry and this morning the gallium.

We wrote last week Selectro had beaten our expectations three announcements in a row, and it has just made it four.

We bought MRD at 2.4c in March for the scandium in the clay. Selectro didn’t exist at MRD then.

Chris Larder brought it with him when he joined as chief technology officer in July, and the leach has been the news ever since. At 4.3c this morning the company is worth $62 million.

How Selectro Got 95% of the Gallium

A refinery extracts the aluminium out of bauxite with the Bayer method, which involves cooking it in caustic soda. About 70% of the gallium ends up in the liquor from the cook (the liquid the aluminium dissolves into) and the other 30% goes out in the red mud.

Red mud is the caustic sludge left after the cook which is kept in a dam forever. Even the 70% in the liquor only gets recovered where a refinery has built a dedicated circuit for it. This is what Alcoa is building at Wagerup.

The sample came from Australian Silica Quartz (ASX: ASQ), whose ground sits next to Alcoa’s bauxite leases. ASQ sent 16 drill samples from four holes at its Athena and Ceres prospects and the lab blended them into one composite.

Bauxite carries about 80 grams of gallium in every tonne, which is too little for the lab’s standard assay to see. The gallium had to go through a more sensitive test, and it came back at 94.9%.

Most of the alumina in Darling Range bauxite sits in a mineral called gibbsite with the gallium locked in beside it. Selectro dissolved the gibbsite and the gallium came out with the alumina, which is why the 95% on gallium landed so close to the 92% on aluminium.

On MRD’s own clay at Grass Patch, Selectro recovered 56% of the gallium. MRD puts the jump to 95 down to tuning the reagent molecule for bauxite before the test.

A week ago, with the gallium still at the lab, managing director Allister Caird told us the early signs were Selectro could pull every valuable metal in the bauxite out in a single leach. This morning he had the number to go with it.

We said last week a gallium result could give a Selectro plant a valuable third product to sell.

The US government’s geological survey put imported gallium at about US$580 a kilo last year, so each tonne of this bauxite holds about US$46 of gallium before the aluminium and iron are counted.

The Patent Mount Ridley Lodged Before the Number

MRD wants to license Selectro to anyone whose ore it works on.

On Monday the company said it had lodged a second provisional patent with IP Australia covering the version of the chemistry tuned for bauxite. It lodged it on October 15, six days before the gallium number came out.

The August patent covers Selectro on the Grass Patch clay. The two sit separately, so MRD can license the bauxite chemistry to a refiner and keep the Grass Patch IP out of the deal.

Caird told us the plan is to file in the important Western jurisdictions, and when we asked how you value a process like Selectro he said it depends on how many feedstocks it works on and he doesn’t know yet.

A royalty on a process running inside somebody else’s refinery is about the cheapest income a company this size could ever earn.

What Comes Next for Selectro

The three metals are sitting in the one solution and MRD now has to get them out as products somebody will pay for, which the announcement calls separation and purification.

A second bauxite test is running with the chemistry tuned further, and more outside ores are lined up behind it.

MRD has also brought forward the design and construction of a Selectro demonstration plant in Perth to run the process in bulk.

We want to see a gallium product at a purity a chip maker would buy and the second bauxite test holding above 90%. We said last week the number we want most is MRD’s own cost per tonne against Bayer.

Our Take on Mount Ridley Mines

We bought MRD in March for the scandium in 368 million tonnes of clay at Grass Patch. In August the resource went to 946 million tonnes and the biggest reported in the world, with the clay still open in every direction, and in September Selectro got 91.8% of the scandium out of it.

Then it went to work on somebody else’s bauxite and got more than 90% of every metal it went after.

Alcoa needs a refinery and a new plant with three governments behind it to get at 70% of the gallium in its bauxite. MRD’s pitch to a refiner is now three products out of one leach and a pile of sand in place of the dam.

MRD has a process it can sell to the people who own the bauxite, and this morning it proved the process gets the gallium too.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club has 2,083,333 performance rights and 303,030 shares in MRD. Equities Club has been engaged by MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

Tower is a US$22 billion chipmaker, and Intel agreed to pay US$5.4 billion for it in 2022.

Ephraim Koltin spent more than 20 years there and finished as chief operating officer, with 2,700 staff and every plant Tower owned (in Israel, Japan and the US) reporting to him. Tower was selling more than US$600 million of chips a year on his watch.

Adisyn (ASX: AI1) today named him incoming CEO of 2D Generation, the subsidiary that grows graphene inside the same machines Tower runs.

The board said in September it wanted a chip-industry boss for 2DG, and Koltin’s job from day one is to get the 200mm wafer results in front of the chipmakers and sign the first one to a binding deal. Tower runs the same 200mm production lines AI1 proved its graphene on in August.

A heavy hitter like Koltin taking the job at a $91 million company is the biggest vote of confidence in the graphene we’ve had yet.

Our favourite line in the announcement sits in the appendix. Of Koltin’s 10 million performance rights, 8.5 million are worth nothing until AI1 holds 34c, four-and-a-half times today’s price.

The top hurdle is 72c, and another tranche only pays once AI1 has booked US$10 million of revenue. He makes money when shareholders make money.

AI1 trades at 7.7c with about $15 million in the bank.

Meet Ephraim Koltin

Koltin spent his Tower years inside the factories. He ran process engineering at the company’s second fab, then business development, then the first fab itself, and in 2009 he took over every plant Tower owned.

Tower’s revenue went from US$299 million in 2009 to a record US$639 million in 2012 with him running operations. He finished as chief operating officer and left in 2014.

Part of his job there was finding new raw materials for production, and he led the negotiating teams on the deals that grew Tower’s sales.

His name is on four US patents from his Tower days. One of them covers how the copper wiring layers are laid out on a chip, and he’s now in charge of the company replacing them with graphene.

One bad process step on a chip line wrecks thousands of wafers, so for two decades Koltin was who a materials company had to convince before its process got anywhere near a Tower production line. AI1 has hired him to go and do the convincing.

Koltin spent the past eight years at Arkal Automotive and has been its CEO since December 2021. Arkal runs five factories making plastic parts for car makers like BMW and GM.

Car makers test a new part for months before it goes anywhere near a production line, so he has spent eight years getting new parts through the same grind AI1’s graphene is about to face at the chipmakers.

Arkal is owned by Raval, the Israeli manufacturer AI1 signed with in May to build radar-absorbing graphene parts for drones, so Koltin already knows AI1’s drone partner from the inside.

He also sat on 2DG’s advisory board from its early days, so he has seen the graphene work up close before agreeing to run it.

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What AI1 Has Built

The chips inside phones and AI servers are wired with copper tracks called interconnects, so thin that once a chip shrinks below two nanometres the copper runs hot and starts to choke.

Graphene is a sheet of carbon one atom thick, and it keeps carrying the signal at sizes where copper fails. A chip wired in graphene runs faster and cooler on less power, and across a data centre full of AI chips the electricity lost to hot copper adds up to a small city’s power bill.

TSMC, the biggest chipmaker on earth, has already named graphene as the way past copper, and the wiring inside chips is a market worth around US$31 billion a year.

Growing graphene normally takes about 1,000°C, and a chip is wrecked above 450°C.

AI1’s team in Israel spent six years on a patented recipe that grows graphene below 300°C, inside the deposition machines chip factories already own.

It grew the first full square of it in April, a centimetre across. In June it ran the recipe three times on three separate days and got the same graphene each time, then handed the data to a UNSW professor who trained under the man who won the Nobel Prize for graphene, and he confirmed it was real.

In August it covered a 200mm industrial wafer edge to edge, 300 times the area of the April square and two months ahead of its own plan.

Along the way AI1 had two US patents allowed and raised $14 million from Regal Funds and Israel’s largest investment house Meitav.

The plan is to licence the recipe to chip factories and collect a royalty on every wafer that comes off the line. A fab running it gets to sell chips its rivals can’t make.

What Comes Next

When we sat down with AI1’s chairman Kevin Crofton on a Saturday night back in April, he told us the companies he used to run had spent hundreds of millions of dollars trying to get graphene into a chip. He’d tried it himself on three different types of machine and failed every time.

He also walked us through how a deal like this gets done in his industry. A chipmaker pays for exclusivity on one application, or an equipment giant takes a stake in the company with a first right of refusal to buy the lot.

Koltin sat through those negotiations for 20 years from the chipmaker’s side. One tranche of his rights only vests once two contracts with parties he introduced are worth US$1 million between them, so the board has basically written his contact book into his pay.

Current 2DG boss Arye Kohavi stays until November 30 to hand the business across, then moves over to run the radar subsidiary part-time.. The founder keeps the drones and the chip veteran gets the chips.

AI1 is repeating the 200mm wafer work to prove the graphene comes out even every time, then taking the data to chipmakers while it pushes toward the 300mm wafers TSMC and Samsung build AI chips on.

On the drone side, AI1 set itself a target of November 7 for the signed deal with Raval, three weeks from now.

Our Take

We added AI1 at 6.8c in April and it sits at 7.7c today, with a verified full wafer of graphene and two US patents added since.

Crofton told us in April that when he asked chip companies what a working low-temperature graphene process would mean to them, the reply was that it’s worth more than their own company.

AI1 is worth $91 million. The board has just hired a man who sat in those companies’ chairs for 20 years, and told him the big rewards start at 34c.

General advice warning
The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure
The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 900,000 AI1 performance rights at the time of publishing this article. Equities Club has been engaged by AI1 at the time of writing.

Confidentiality notice
The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No. 519872.

You’ve all seen it by now. Elon Musk put the new Roadster on a livestream from SpaceX’s yard in Texas, sent it up a ramp and flipped it upside down, and landed on its wheels on rocket thrusters.

“Well, it worked,” he said. An understatement, after delivering the George Jetson moment we were promised as kids.

Elon’s haters were out before the thrusters had cooled, saying it’s years behind schedule and it’ll never be legal on a road. They’re right, but who cares. He just showed us a flying car, and god knows what, if anything, that means for the future.

People have been betting against Musk since Tesla listed in 2010. In 2020 the short sellers lost US$38 billion on Tesla, the biggest loss anyone had ever recorded on one stock, and he’s now the richest man alive.

It’s all to say it’s never as bad as it seems (or as good).

We’ve heard small-caps declared dead at a few barbecues recently, and it’s been said about bigger markets than ours.

In August 1979 BusinessWeek put “The Death of Equities” on its cover in big white letters. Three years later the biggest bull market in history began, and the S&P 500 has returned close to 7,000% since with dividends.

And the people at our end of the market are still having a go.

What caught our eye this week:

• Agnico pays US$14.8 million for the ground around Elk

• Powerhaus jumps 24% on no news

• MRD pulls 92% of the aluminium out of a pile of bauxite

• Copper sets a record in a year with zero new discoveries

• KAO finds out what visuals weigh

• A 20c pregnancy test company lists into the sell-off and doubles

• 10X finds the copper the 1970s left behind

Let’s get to it.

Agnico Backs the Ground Around Elk

We nearly fell off our chair on Friday when a deal landed right next door to our Idaho gold explorer Elk Range Mining (ASX: ELK), at a price that makes Elk look cheap to us.

Canadian gold major Agnico Eagle paid US$14.8 million for 14.9% of Scout Discoveries, a private explorer whose ground almost completely surrounds Elk’s Friday gold mine.

For anyone new to the name, Agnico is one of the biggest gold miners on the planet, worth just under US$100 billion. It owns Victoria’s Fosterville mine and expects to produce more than 3.3 million ounces of gold this year.

US$14.8 million for 14.9% puts Scout at close to US$100 million.

Agnico’s US$14.8 million works out at about A$21.5 million, and the whole of Elk is worth about A$17 million at 13.5c.

Scout’s best hole in its latest investor presentation ran 100.6 metres at 1.2 grams of gold a tonne from surface.

Elk’s 2014 hole at Friday ran 113 metres at 5.22 grams a tonne from 24 metres down.

The last owner of Friday spent more than US$40 million on it and mined underground from 2018 to 2022.

On top of the shares, Agnico can earn up to 70% of Scout’s ground in the Elk City district by paying for US$60 million of exploration over the next eight years. Scout runs the drilling and Agnico pays for it. After the first US$20 million of exploration spend Agnico owns 51%.

Our guess is Agnico is chasing 10 million ounces or more in the district.

We wrote last week that Elk’s first hole went about 200 metres deeper than the 2014 hole and the geologists saw gold at five depths. The core is at the lab on a rush order.

The first assays are due in the coming weeks, and this deal has us more bullish on Elk than ever.

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Powerhaus Jumps 24% on No News

The uranium company in our portfolio jumped nearly 24% on Friday with no news out.

It was the second-biggest day of buying since Powerhaus Uranium (ASX: POW) listed in August, the day we added it to the portfolio.

Malbec is POW’s uranium project in Chubut province in southern Argentina, and POW plans to start drilling it in November once the environmental permits come through. We’re keen to see the rig turning, and we’ll share the permit news as soon as it lands.

The rig will drill about 5,000 metres hunting roll fronts. A roll front is a crescent of uranium that groundwater left behind in the sandstone millions of years ago.

We’ve written about roll fronts before. Kazakhstan mines about 40% of the world’s uranium from them by pumping a solution down one well and drawing it back up another, and it’s some of the cheapest uranium on earth to mine.

Uranium is about US$90 a pound, up about 13% in a year.

While POW waits on permits, its crews are sampling a calcrete terrace at Malbec. Assays are due later this year.

Calcrete is the hard white crust you see across WA’s Goldfields, and it can hold uranium just below your boots.

The calcrete assays and the first holes at Malbec both land before Christmas.

MRD Explains Selectro With a Tea Bag

The photo in Monday’s announcement from our critical minerals explorer Mount Ridley Mines (ASX: MRD) is a pile of red dirt next to a small pile of grey sand.

The red dirt is Darling Range bauxite, the ore every aluminium can starts out as. The grey sand is what was left after MRD’s leach pulled 92% of the aluminium out of it.

A refinery cooks the same bauxite in caustic soda (the chemical in drain cleaner) and what it has left is red mud. Red mud burns skin, and the only place to store it is a dam.

There’s about four billion tonnes of it in dams around the world, and Alcoa keeps its share behind its refineries south of Perth.

Refineries sell about US$235 billion of aluminium a year. A refinery is left with a third to just under half of every tonne of bauxite as red mud, and MRD wants to sell them a way to make the same aluminium and leave sand behind.

MRD’s leach is called Selectro, and managing director Allister Caird sat down with us this week and explained it with a tea bag. The bauxite is the leaves and the leach is the hot water. The aluminium ends up in the water, where you collect it.

MRD built Selectro for its scandium clay at Grass Patch near Esperance, and this was its first go on somebody else’s ore. Caird had been asking around for bauxite and Australian Silica Quartz gave him samples from the ground next to Alcoa’s leases.

“We haven’t adjusted anything to find where the sweet spot is,” he told us. The lab ran the bauxite on the recipe MRD uses for its own clay, and Caird expects the recoveries to improve once the team tunes it.

It pulled out 97% of the iron as well, and Caird told us MRD can separate it out and turn it into a product.

A refinery also burns gas to cook its bauxite at about 145°C in pressure vessels. Selectro did the whole job below the boiling point of water, so a Selectro plant pays for a lot less fuel.

MRD was worth about $50 million at the start of the week, and it wants every refinery in the world paying to use the tea bag.

We’d have taken 80% on a first run and called it a win. We bought MRD at 2.4c in March, it finished the week up more than 20% at 4.3c, and the gallium result from the same test is still at the lab.

Our interview with Caird got a lot of love this week. It’s below if you missed it, and you can read our full write-up here.

Zero Copper Discoveries and a Record Price

S&P Global keeps a count of the big copper discoveries made around the world each year. Through the 1990s and 2000s it counted more than 10 a year. In 2025 it counted zero.

Copper set a record on the London Metal Exchange this week, and the big banks have lifted their price forecasts to keep up.

Bank of Montreal (BMO) now has copper at US$14,675 a tonne next year and US$18,000 by 2030. Its analysts call today’s price of around US$14,500 “fundamentally supported”, which is banker-speak for here to stay.

Deutsche Bank tips about US$22,000 a tonne by mid-2027, because China and the US are locking up most of the world’s spare copper in reserves and warehouses.

Data centres are sized by the power they draw. A gigawatt is about what one large power station puts out, and BMO estimates every gigawatt of data centre built takes about 35,000 tonnes of copper.

The US has about 62 gigawatts of data centres today and S&P expects 152 by 2030. The extra 90 gigawatts need more than three million tonnes of copper, and the whole world uses about 28 million tonnes a year.

Ivanhoe Mines founder Robert Friedland says the world has to mine as much copper in the next 18 years as it has in the past 10,000.

We called FMR Resources (ASX: FMR) at 16c in 2025 and it hit 65c last month, and at these prices we think there’s another one of those at the small end of the ASX.

KAO and the Risk of Buying on Visuals

Kaoko Metals (ASX: KAO) listed in May at 20c to hunt copper in Namibia, and by September 1 the shares were at 73.5c.

The next morning it told the market the first two holes anyone had ever drilled at its Chalkos project had visible copper over 60 metres and 51 metres. The shares closed the day up 145%.

Visible copper is the green malachite and sooty black chalcocite a geologist can see on the core tray. The grade comes from the lab weeks later.

KAO kept running until it passed $3 and was worth 15 times its float price, and it raised $20 million at $2.20 on the way up.

The assays came back on Monday. The best hole ran 37 metres at 1.23% copper from 54 metres down, which is about 12 kilos of copper in every tonne.

For a first two holes on ground nobody had drilled before, plenty of explorers would take it. The buyers who took KAO past $3 had been expecting a lot more than 1.23%, and the shares got smashed back to 82c, about where they were before the visuals.

More holes are at the lab and two rigs are still turning, so KAO has plenty of results to come.

A visual means copper is in the hole. Until the lab says how much, everyone buying is guessing at the grade, and the number can be a good one and still fall short of the guess.

An IPO Doubles Through the Firmus Hangover

Firmus pulled the biggest float in decades last week, and on Tuesday a pregnancy blood test company pressed ahead with a A$10 million raise at 20c and listed anyway.

Identifai Genetics (ASX: ID1) ran as high as 54c through the Firmus drama and finished the week at 40c, double what the IPO buyers paid.

Its test is called Windrose and it came out of Professor Noam Shomron’s lab at Tel Aviv University.

Mums-to-be have paid for a blood test since 2011 that screens for Down syndrome and a handful of other chromosome problems. Windrose reads the same blood sample for more than 280 single-gene conditions such as cystic fibrosis.

Today the mum gets tested first to see if she carries one of those conditions. If she does, the father gets tested next, and if he carries it too the only way to know whether the bub has it is a needle into the womb.

The prospectus says more than half the fathers never get tested.

Windrose checks the bub straight from the mother’s blood at nine weeks and skips the father and the needle.

The IPO money will pay for a 600-patient trial at six to eight American hospitals. It starts this year and the first results are due in the second half of 2027.

Identifai hasn’t said what a Windrose test will cost, and American insurers won’t pay for it until the trial data is in, so the first customers will pay for it out of their own pocket. We’d guess most of them are IVF patients, who’ve already spent a small fortune getting pregnant and won’t blink at one more test.

The real prize is a deal with one of America’s giant pathology chains like Labcorp or Quest Diagnostics. Identifai says it’s talking to the biggest of those chains.

American mums-to-be spent about US$1.1 billion on the standard pregnancy blood test in 2024, and Identifai wants a slice of it.

10X Soils Back Up the 1970s Copper at Watsons

In 1974 the copper price fell 40% in the world recession, and two exploration companies walked off a line of hills three hours west of Sydney with copper and zinc in their soil samples and never drilled a hole.

With copper at a record, the smallest company in our portfolio went back over the same 2.4 kilometres and found the copper and zinc where the old crews left them.

Exultant Mining (ASX: 10X) calls the ground Watsons. It sits inside Black Hammer, 10X’s copper-gold project in the same belt of old volcanic country Newmont mines at Cadia near Orange, where it has around 50 million ounces of gold and 9.5 million tonnes of copper.

Exploration manager Seb Hind’s crew pushed a handheld analyser into the soil at 190 points, and the readings were still high at both ends when the grid ran out. They also picked up a new patch of lead at the northern end reading close to double anything the 1970s crews found.

Next 10X extends the grid once more landholders sign access, then runs geophysics to see whether sulphides sit under the best readings. If they do, 10X has its first drill target at Watsons.

We sat down with executive chairman Brett Grosvenor this week. He told us Black Hammer was meant to be the main asset when 10X listed last December, the team got a little distracted by early results at Peak View, its gold project near Cooma, and now the crew is back where it started.

10X listed with just 37 million shares, which Brett calls unusual for an IPO. In 12 months the top 20 holders have gone from 40% of the register to 48% and the number of shareholders has climbed from about 380 to more than 500.

The company came through its first drill campaign with about $3 million still in the bank.

“Everybody’s fighting for equity and capital right now. Thankfully we don’t need it,” he said.

Full write up here.

At 13c 10X is worth under $5 million with about $3 million in cash, so investors are paying around $2 million for 390 square kilometres of ground, which looks cheap to us.

The Week Ahead

Monday is 39 years since Black Monday. The ASX lost about a quarter of its value in a day in October 1987, and anyone who sold into it has spent four decades wishing they hadn’t.

This week trading was thin and we’ve heard small-caps declared dead many a time this past fortnight.

In the same week, one of the biggest gold miners on earth agreed to spend up to US$60 million drilling the ground around Elk, and a 20c IPO doubled.

Elk’s assays are due in the coming weeks and MRD’s gallium number is still at the lab, so we’ve spent most of the week sitting down with companies we’d like to bring you while we wait.

We’ve watched enough of these cycles to know the mood swings back, and we want our homework done when it does.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares, 625,000 POW shares, 200,000 10X shares, 2,083,333 performance rights and 303,030 shares in MRD at the time of publishing this article. Equities Club has been engaged by ELK, 10X, POW and MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services Licence (AFSL) No 519872.

State inspectors found the levees leaking in mid-2024. When they went back earlier this year the sludge was still getting out, and the water in the ditches was rust-coloured and bright pink.

The sludge is called red mud. It’s what a refinery has left after it pulls the aluminium out of bauxite, and around four billion tonnes of it is sitting in dams around the world.

Alcoa’s refineries south of Perth run on bauxite out of the Darling Range and keep their red mud in dams behind the plants.

Our portfolio company Mount Ridley Mines (ASX: MRD) has just run bauxite from the same hills through a process it owns called Selectro. The photo in the announcement shows red bauxite going in and a small pile of grey silica coming out.

On its first run Selectro recovered 92% of the aluminium and 97% of the iron from a blended bauxite sample.

MRD trades at 3.6c with a market value of about $50 million. The aluminium that comes out of the world’s refineries each year is worth about US$235 billion, and MRD wants to sell those refiners a process that turns the biggest part of their waste bill into a product.

Selectro Takes on the 130-Year-Old Bayer Process

Aluminium starts out as bauxite. A refinery cooks the bauxite in a hot bath of caustic soda (the chemical in drain cleaner) and the aluminium dissolves out into the liquid.

The refinery dries what it dissolved into a white powder called alumina and sells it to smelters, who turn it into metal.

Everything the caustic soda can’t dissolve comes out the bottom as mud, and the refinery pays to keep it in a dam for good. The method is called the Bayer process and refineries have run it since the 1880s.

Iron is the first thing in the dam. It’s between a third and a half of the mud, and Selectro recovered 97% of it. MRD says it can pull the iron back out of the liquid and sell it.

Gallium is the second. It’s the metal in military radar and other defence electronics. China produces about 99% of it and the Trump administration wants it made elsewhere.

Most of the gallium in bauxite goes to the dam, and Alcoa has just committed $200 million to a plant at its Wagerup refinery south of Perth to get it back out of its own liquor.

Selectro has already recovered gallium from MRD’s own clay. The bauxite gallium result is still at the lab, and if it comes in a Selectro plant would have a third product to sell.

Heat is the third. A Bayer refinery cooks Darling Range bauxite at about 145°C inside pressure vessels and burns gas or coal to do it. Selectro did all of this below the boiling point of water at normal pressure.

On our own back-of-the-envelope sums, less fuel and more products to sell bring Selectro in well under the cost of the Bayer process.

The bauxite for the test came from Australian Silica Quartz Group (ASX: ASQ), whose ground sits right next to Alcoa’s bauxite leases. ASQ sent samples from four drill holes and the lab blended them. If Selectro works on this bauxite it works on Alcoa’s.

Mount Ridley Mines and Selectro

We added MRD to our portfolio in March at 2.4c for Grass Patch, its clay deposit 25km north of Esperance in WA. Five months later MRD upgraded the clay to the world’s largest reported scandium resource, with heavy rare earths and gallium in the same ground.

Chris Larder changed the company’s direction when he became chief technology officer in July. He brought a leach called Selectro he had spent more than a decade building.

Chris knows the process better than most, having worked on two of the three active bauxite refineries in Western Australia.

Managing director Allister Caird explains a leach with a tea bag. The ore is the tea bag and the leach is the hot water. The metal comes out into the water and you collect it from there.

Selectro’s reagent runs in a closed loop, so the plant recovers it after each batch and uses it again.

On Grass Patch clay, Selectro recovered 91.8% of the scandium in its third test, against 27.6% for the standard hydrochloric acid leach.

Bauxite looks a long way from a scandium deposit. Scandium’s main job is making aluminium alloys stronger, so Caird says MRD was heading toward the aluminium industry anyway.

The bauxite test is Selectro’s first on ore from another company.

The small-cap market has gone quiet lately and MRD was still up nearly 50% on our entry price before the result came out.

“This is a remarkable result for Selectro. Bauxite is a very different material to our Grass Patch feed, so this test gives us a clear indication of how broadly Selectro can be applied.”

- Allister Caird, managing director of Mount Ridley Mines

What Selectro Leaves Behind vs Red Mud

When the Selectro test was finished, about a quarter of the sample was left over. It was mostly silica (what sand is made of) and it came out close to neutral on the pH scale.

Red mud sits up near drain cleaner on the same scale and burns skin. Almost none of it can be reused, so refineries keep it in dams for good.

A Bayer refinery is left with between a third and just under half of every tonne of bauxite it puts through, and all of it is red mud.

Red mud holds scandium too, and Selectro has already recovered 91.8% of it from MRD’s clay. A US company is planning a US$850 million plant to pull gallium and scandium back out of the leaking red mud lakes up the Mississippi. It’s the best evidence we’ve seen that the metals in red mud are worth going back for.

The world mined about 440 million tonnes of bauxite last year and added 150 to 200 million tonnes of red mud to its dams. If every tonne went the way of MRD’s sample, the leftovers would come to about 110 million tonnes of sand, and the dams would take in somewhere between 40 and 90 million tonnes less a year.

We know a lab sample is a small thing to hang tens of millions of tonnes on, and MRD still has to repeat it on bigger batches in its demonstration plant.

A single plant running Selectro would keep millions of tonnes of red mud a year out of a dam.

What Comes Next for MRD

The team ran the bauxite through Selectro as it was built for Grass Patch clay. Tuning it for bauxite is the next job, and Caird expects the recoveries to improve from there.

MRD has more ores from other companies lined up for testing. It had told the market to expect the first outside result in early 2027, and this one turned up months early.

Bayer refineries can’t make money from bauxite with too much clay in it, because the clay uses up their caustic soda and takes alumina into the mud with it. Selectro was built on clay, so MRD thinks it can open up bauxite the industry has written off.

There are also bauxite deposits too small to pay for a refinery, and MRD sees room for small Selectro plants built next to them.

MRD is designing a demonstration plant in Perth to run Selectro in bulk on its own clay and on other companies’ ore, and it says it has the money to keep going. The plant will also make sample batches for the buyers and partners MRD wants to sign.

What We’re Watching at MRD

We’re still working out how big this could get, and so is MRD.

The gallium result from the bauxite is the next news we expect. We also want to see Selectro repeat the result on a second outside ore, because ASQ chose the samples for this test.

The number we want most is MRD’s own costing against Bayer. Ours is a back-of-the-envelope sum, and the demonstration plant work should produce a proper one.

MRD is talking to industry and government about funding the next stage. Alcoa is the obvious partner. It’s an American company, and Caird wants to take Selectro to the US.

Selectro has now beaten our expectations three announcements in a row, twice on MRD’s own clay and now on another company’s bauxite. We’d have been happy with 80% of the aluminium on a first run at bauxite, and it came in at 92.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club has 2,083,333 performance rights and 303,030 shares in MRD. Equities Club has been engaged by MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

They packed up in 1974 without drilling a hole as the copper price fell about 40% in the world recession.

Today Exultant Mining (ASX: 10X) said its crew went back over the same hills with a handheld analyser and was still picking up copper and zinc at both ends when the survey finished.

The crew also found a new patch of lead at the northern end, reading close to double the best 1970s number.

10X is the smallest company in our portfolio, valued at under $5 million at 13c with about $3 million of it in cash, and its copper targets sit in a tier-one mining jurisdiction.

The company calls the ground Watsons, and it sits inside Black Hammer, 10X’s 390 square kilometre copper-gold project in the same belt of old volcanic country as Newmont’s Cadia mine.

Cadia sits near Orange and is one of the biggest gold-copper mines in the world, with around 50 million ounces of gold and 9.5 million tonnes of copper.

A Quick Catch-Up on 10X

10X listed in December 2025 and we bought in a couple of months later after sitting down with executive chairman Brett Grosvenor and the team.

They had ground full of old high-grade hits nobody had tested with modern gear, and a plan to do the cheap fieldwork before paying for a rig.

10X listed expecting Black Hammer to be its key asset, and Brett admits the team got a little distracted by early results at Peak View, its other NSW project near Cooma.

The maiden drill program there in August hit silver, zinc and lead at modest grades at the Balerion prospect, and the crew then moved north to Black Hammer.

Take out the $3 million of cash and you’re paying about $2 million for 390 square kilometres of copper-gold ground, which looks cheap to us.

“Everybody’s fighting for equity and capital right now. Thankfully we don’t need it,” Brett told us.

There are 37 million shares on issue, and Brett told us the top 20 holders have gone from owning 40% of the company to 48% since the float.

It’s a sign of confidence in management and the assets in our opinion.

We think a good drill result at Black Hammer could move 10X a long way.

Boa Resources (ASX: BOA) drilled 22 metres at 3.05% copper in WA a fortnight ago and went from $30.5 million to $50.9 million in a week. A copper hit at 10X would land on a company a sixth of Boa’s size before the hit, with about an eighth of the shares.

What 10X Found at Watsons

Exploration manager Seb Hind and his crew pushed a handheld XRF gun into the soil at 190 points and took copper, lead and zinc readings on the spot.

The video below has Seb on the ground at Watsons, where the copper and zinc run for 2.4 kilometres through the hills behind him.

The 1970s crews took their samples along lines up to 488 metres apart, so there were big gaps nobody had tested. 10X went back with a much tighter grid of 50 by 100 metres to see whether the old numbers were real.

The copper and zinc turned up in the same places the old reports had them, along the same 2.4 kilometre strip. The readings were still high at both ends where the grid stopped.

Copper peaked at 330 parts per million and zinc at 529. For copper it works out to about a third of a kilo in every tonne of soil.

Soil numbers always look small next to drill results because the soil only carries a trace of whatever metal sits in the rock underneath. Geologists judge a soil reading by how far it stands above the ordinary dirt around it.

The typical reading at Watsons was 44 parts per million copper, so the best one ran at more than seven times normal. We rate it a solid result for a soil survey.

The strongest readings sit over volcanic rock cut by the same quartz veins where the 1970s geologists found copper minerals.

10X also found lead at the northern end in a patch about 100 metres wide and 300 metres long.

Copper and zinc ran high in this patch, so 10X has a sharper spot to aim at.

“When we redeployed the team from Balerion, we flagged Watsons as the immediate opportunity at Black Hammer, and this survey shows why.”

- Executive Chairman Brett Grosvenor

It’s early days and drilling is the only way to find out what sits below, but we like what 10X is finding at surface.

A drill program can eat a large slice of the cash at a company this size, so 10X is spending wisely on fieldwork before putting holes into the ground.

What Comes Next for 10X

10X plans to extend the grid north-east and south once it signs access agreements with more landholders, and it’s looking at lab analysis on the best spots.

It’s also weighing up ground magnetic and IP surveys. IP runs an electrical current through the ground and maps where the charge holds, which is how geologists find the sulphide minerals carrying copper, zinc and lead.

If the geophysics picks up sulphides under the best soil readings, 10X has its first drill target at Watsons.

Copper traded near US$6.70 a pound on Monday, about 2% under September’s record and up about 30% in a year.

Copper stockpiles are already low, and 709 workers at Antofagasta’s Centinela mine in Chile walked off the job last week. Their unions say production there could halve in November.

Glencore starts trading on the ASX this week at a value of about US$88 billion, and it plans to almost double its copper production to 1.6 million tonnes a year by 2035. A miner its size only spends the money when it’s sure of buyers.

We’re copper bulls, and we like owning a $5 million explorer on the hunt in the same belt as Cadia.

Our Take on 10X

It’s rare to find an explorer this small with money in the bank and a register this tight.

In 10 months on the ASX the team has drilled its first six holes at Balerion and gone straight on to Watsons, and the chairman bought 500,000 shares on market along the way.

From here 10X will widen the soil grid and look at geophysics to pick its first drill target at Watsons. Black Hammer has two more undrilled targets behind it.

The last crews to find metal at Watsons packed up as copper fell 40%.

10X is on the same hills with copper near a record and $3 million in the bank, and we like its chances of being the first to put a drill hole into them.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 200,000 10X shares at the time of publishing this article. Equities Club has been engaged by 10X at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

The AI data centre builder was asking $11 a share, and last Sunday we said it’s out of our usual wheelhouse but we’d lean towards shorting it once it listed.

It turns out no one will get the chance.

The AFR ran a bit of a campaign against the float this week, and people close to Firmus are reportedly already blaming the media for killing it.

But when you aim to list a $44 billion company that has never made a profit in a new frontier, you’ve got to expect a few bruises and hard questions on the way to market.

Cynical News Corp journos love to grumble about the company’s all-knowing Verity score, which was brought in to rank their stories on the clicks and subscriptions they drive.

Write about topics that produce a good Verity score (think Dan Andrews, bikie wars, private school rankings…) and you get a gold star next to your name from the higher-ups. It’s why the same topics get run again and again.

We’re going to guess The AFR has a similar ranking system, and Firmus sent it off the chart this week. As we type this there are 28 mentions of the company on The AFR’s homepage.

Away from Firmus it was a quiet week at the small end of the ASX, although a 2c rare earths explorer still managed to triple.

Here’s what else caught our eye:

• Why a quiet market suits busy companies

• Powerhaus puts crews on the ground in Argentina

• Drones take over Land Forces in Perth

• Fortuna’s first deep holes deliver the goods at Mkanda

• Elk Range sees gold at five depths as core is off to the labs

• Black Horse starts deeper drilling under Mt Egerton

• ASX small-cap of the week, a 2c rare earths explorer triples

Let’s get to it

Firmus Flops

Firmus would have landed among the 20 biggest companies on the ASX.

The AI data centre builder set out to raise $7.9 billion at $11 a share, which put a $44 billion price tag on a company that made about US$50 million in revenue last financial year.

Backers including Nvidia and Blackstone put money into Firmus in July at a valuation of $15.5 billion, roughly a third of what the bankers were asking three months later.

The crazy part is last week Firmus’ term sheet (the sheet brokers send out to investors) said it already had more orders than shares to sell.

Firmus opened its books to the super funds and fund managers on Monday, and Australia’s fourth-biggest super fund UniSuper said the float was “priced to perfection”, meaning everything had to go right to justify the valuation.

In the end UniSuper kept its money in its pocket.

The bankers had been counting on big orders from American funds, and the orders never came.

By Wednesday night the bankers were talking about $9 a share, and by Thursday the number being reported was $8.25.

The Australian then reported they were testing whether anyone would pay $5.50, which is half the price Firmus started the week at.

On Friday it became clear a discounted price would be a horrible look, and Firmus pulled the IPO.

Construction company Maas Group (ASX: MGH) owns 3.2% of Firmus and has $1.1 billion of contracts to do the electrical work on Firmus’ data centres. Maas shares fell 32% this week.

The banks running the deal had been in line for about $215 million in fees. There’s going to be a few smaller Christmas parties than the bankers expected.

Firmus still needs billions to build its data centres and plans to borrow up to US$35 billion to do it. It says it will go back to private investors for the money and look at listing on the Nasdaq, and we’d be surprised if this is the last we hear of it.

US data centre company CoreWeave looked in trouble last year when it had to cut its float price and nearly halve its raise. The investors who backed it at the discounted price more than quadrupled their money within three months.

And we say all this not to put the boot in. We like big stories and we like the great unknown. Firmus had a swing at both, and the ASX needs more companies willing to have a go.

A good float would have given the ASX a lift, although we do wonder how much of the $7.9 billion would have come out of other shares to pay for it.

We thought the price was the problem (as plenty of others did). At the right price we’d look at it differently.

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A Quiet Market and the Companies Still Working

The small end of the ASX has gone quiet. It might be school holidays, it might be interest rates, or a government policy lag effect. Either way, trading volumes have dried up.

We caught up with a number of brokers this week and each of them talked about how thin the trading has been. One of them described it as the worst he has seen in years.

We own shares in the companies we back, so we feel a market like this in our own pockets.

We turn down a lot more companies than we back, and we only back the ones that stay active. A company that sits on its hands waiting for the market to turn will have nothing to show when it does.

Right now we’ve got a gold explorer in Idaho and a rutile explorer in Malawi waiting on assays from the lab.

Another gold explorer has a rig turning under an old Victorian goldfield and a uranium explorer has crews lining up drill targets in Argentina.

Others in the portfolio are working on commercial deals, and the drone parts maker is shipping to its customers again.

For punters a quiet market is a chance to get behind hard-working companies while their share prices are out of favour.

We’ve been through quiet markets before and each one turned. When this one does we want to be holding the companies with results in hand.

Powerhaus Uranium Gets to Work in Argentina

The uranium price has tripled in six years, from about US$30 a pound to around US$90, and this week our uranium explorer Powerhaus Uranium (ASX: POW) started fieldwork at Malbec, its main project in Argentina.

Power companies buy most of their uranium on long-term contracts, and the contract price went past US$90 in January for the first time since 2008.

POW holds a large land package of about 2,000 square kilometres. This week crews started surveying nine square kilometres of shallow uranium ground with radiation detectors and taking samples, with results due before the end of the year.

The nine square kilometres are part of a 17 square kilometre terrace, the biggest stretch of shallow uranium ground POW has found at Malbec so far.

The uranium here sits within a few metres of the surface, and in places the crews can see it as a yellow mineral in the rock.

Earlier samples from the southern end ran 523 and 344 parts per million uranium oxide. If the new samples stack up, POW plans to dig trenches early next year and follow with drilling.

The bigger target is deeper in the sandstone, where POW is looking for the same style of uranium deposit Kazakhstan mines. Kazakhstan produces around 40% of the world’s uranium.

It’s some of the cheapest uranium in the world to mine because the miners pump a solution down wells and draw the uranium back up.

Drilling is slated for November once the environmental permits arrive. It will be POW’s first drill program at Malbec.

We went to POW’s investor lunch this week and nearly the whole board was there.

Steve Blower sat on the discovery teams for three uranium finds in Canada, and Andrew Penkethman drilled out the resource at Husab in Namibia.

Sashi Davies ran marketing at Extract Resources, which owned Husab and sold for $2.2 billion.

They could sit on nearly any uranium board in the world, and hearing them explain why they like the geology in Argentina gave our confidence in POW a lift.

Managing director Siobhan Lancaster worked on the Husab sale too. She then ran 92 Energy, which found uranium on its fourth drill hole and was taken over inside three years of listing.

She walked the room through the plan for Malbec, and we rate the team she has put together. And last but not least, chairman Richard Pearce was present. Pearce founded 92E, and was chairman at the sale.

POW finished the week at 19c and we’re looking forward to the next few months.

Drones Lead the Show at Land Forces in Perth

Australia’s biggest land defence trade show came to Perth for the first time this week, and drone makers were out in force.

Land Forces ran for three days at the convention centre with 964 exhibitors from 60 countries, including Boeing and BAE Systems.

The army has drones “in the low thousands” and is getting ready to buy a lot more, a brigadier told defence news site Janes at the show.

Defence Industry Minister Pat Conroy said at the show the government has added $5 billion to its drone budget. He said it has also doubled what it spends on defences against drones.

The money is promised over 10 years and the army is still trialling much of the equipment, so the orders are slow to arrive. We think they’ll come once the trials finish.

ASX-listed weapons maker EOS said at the show demand for its counter-drone systems is the strongest it has seen, and on Friday it signed a $700 million counter-drone deal with a Gulf government. It’s the biggest contract in EOS’ history.

EOS found its buyer overseas, and it’s why we like defence companies with customers outside Australia.

We’ve backed drone parts maker KTEK Aerosystems (ASX: KTK), which listed on the ASX in May.

KTK builds the wings and body sections of military drones out of lightweight composites in Europe, assembles them for US customers in Los Angeles, and sells them to the companies that make the drones.

The Iran war shut the shipping route to KTK’s biggest customer in March. Deliveries started again last week, so the parts are going out and revenue is flowing again.

It has also won its first order from a major Israeli defence company. While the small suppliers at Land Forces wait on orders, KTK is busy delivering the ones it has.

Governments have announced far more defence spending than they’ve handed out, and we think a lot of it still has to reach the smaller companies selling into a global market. We’re always looking for new defence stocks to cover.

Fortuna Metals Drills Deeper at Mkanda

Rutile explorer Fortuna Metals (ASX: FUN) drilled below eight metres at its Mkanda project in Malawi for the first time this week.

The best hole ran 24 metres at 1.5% rutile from surface and was still in rutile when the rig stopped.

Another returned 3.43% rutile from about 30 metres down, which is the highest grade Fortuna has recorded at Mkanda.

Fortuna’s July resource of 298 million tonnes at 0.87% rutile only counts the top eight metres, because hand augers can’t drill any deeper.

It already ranks as one of the six biggest rutile deposits in the world.

Rutile is the cleanest starting point for the titanium that goes into jet engines and the joints of humanoid robots.

Fortuna has done all of it in the year since we backed it at 4c, and SpaceX investor WndrCo paid 11c a share for 18.57% of the company in June.

Mlongo is the first prospect back from the lab. Kahuna and Agogo are next, and Fortuna expects the rest of the results over the next four to six months.

FUN closed the week at 9c, which is more than double our entry and still below the 11c WndrCo paid.

Sovereign Metals (ASX: SVM) owns the world’s biggest rutile deposit 20km north of Mkanda, and its resource nearly tripled after aircore rigs drilled it to 20 metres.

Sovereign is worth about $325 million with Rio Tinto on its register, and Fortuna is worth about $39 million.

If the other prospects carry their grade as deep as Mlongo, we think the next resource could be a good deal bigger than 298 million tonnes.

Elk Range Sees More Visible Gold in Idaho

Gold explorer Elk Range Mining (ASX: ELK) has finished its first hole at the Friday Gold Mine in Idaho, and the geologists saw gold in the core at five depths.

Friday is a built and permitted underground gold mine the last owner parked during Covid.

The deepest was a thread of gold more than a centimetre long from 234 metres down.

The best of the old holes at Friday ran 112 metres at 5.22 grams of gold a tonne in 2014, and it stopped where the drilling plan ended at 137 metres.

What sits past the end of the old hole is the reason we bought ELK shares, and the geologists have now seen gold in three places past it.

“For a geologist, it doesn’t get much better than opening a core tray and seeing visible gold,” CEO Edward Keys said.

We’ve written three pieces about gold the geologists have seen and we’re as keen as anyone for a grade. Our latest article is here.

The assays are the next big news for ELK. The core is at the lab on a rush order and Elk expects the numbers in late October or early November.

Elk has also sent 113 metres of the 2014 core back to the lab, and those results are due at the same time.

The drillers are already on the second of eight holes and working around the clock. We like what the geologists are seeing and we’re happy to wait.

Black Horse Mining Starts Drilling at Mt Egerton

A drill rig is turning again at Mt Egerton, the central Victorian goldfield that produced 1.29 million ounces of gold before water flooded the workings in 1906.

Gold explorer Black Horse Mining (ASX: BHL) has started the first of up to 10 holes in a program of about 4,000 metres. You can find the article we wrote about this week’s announcement here.

Managing director David Frances told us in December it was a simple story.

“We’re looking for gold in Victoria where there’s plenty of gold and we hope to find some more,” he said.

We named BHL our 2025 Small-Cap of the Year and we’ve waited since March for this drilling.

Heavy winter rain cut off the drill sites within weeks of the rig arriving in June, and BHL has since rebuilt the tracks for all weather.

While it waited BHL reopened a tunnel sealed for more than a century and sampled 1.3 metres at 10.79 grams of gold a tonne inside.

More than 90% of the drilling at Mt Egerton since the mine shut stopped above 150 metres, and BHL’s rig can reach 1,000 metres.

The Fosterville gold mine sits in the same corridor of Victorian goldfields, and its richest zone only turned up after drilling pushed past 800 metres.

BHL finished the week at 22c, and we think one good hole at depth could move the company a long way.

Alvo Minerals Triples on Brazilian Rare Earths

The best small-cap on the ASX this week was a rare earths explorer in Brazil that was worth about $5 million last Friday.

Alvo Minerals (ASX: ALV) started the week at 2c and finished it at 7c.

On Thursday Alvo reported drill results from its Bluebush project, where it found dysprosium and terbium in clay close to the surface.

They’re the two heavy rare earths that go into high-powered magnets, and China restricts who gets to buy them.

The best hole ran 19.5 metres at 1,324 parts per million rare earths from one metre down, and Alvo said many of its holes were still in the clay when they stopped.

Bluebush sits in the same granite as the Serra Verde rare earths mine USA Rare Earth bought this year for US$2.8 billion.

Alvo also raised $1 million on Thursday at 2c a share, and the investors who took it have more than tripled their money on paper in two days.

Alvo has no resource at Bluebush yet and is drilling towards its first one.

It was a quiet week for small-caps and a $5 million explorer still tripled on one set of drill results.

The Week Ahead

The ASX lost its biggest float since Telstra on Friday, and on Wednesday it gets one of the biggest miners in the world.

Glencore is due to start trading here under the ticker GLC without raising a dollar.

CEO Gary Nagle said Australian super funds asked for the listing because they wanted to buy more Glencore shares than their rules let them buy in London.

Australians know how to value a mine, and it’s why most of our portfolio is explorers.

Glencore plans to almost double its copper production by 2035, and copper finished the week within about 2% of the record it set in September.

Gold finished the week just under US$4,200 an ounce, and the small explorers hunting for it are still out of favour. We like the odds of them catching up.

US inflation numbers are out on Wednesday and Australian jobs numbers on Thursday. Both feed into where interest rates go next, and lower rates usually help small-caps.

We’re meeting a large number of companies at the moment as we hunt for the next one to back.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 500,000 KTK shares, 625,000 POW shares, 187,500 BHL shares, 1,554,000 FUN shares, and 625,000 ELK shares at the time of publishing this article. Equities Club has been engaged by KTK, POW, BHL, FUN and ELK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services Licence (AFSL) No 519872.

They all need titanium in their joints, and the cleanest way to make it starts with a heavy, dark mineral called rutile.

We’ve spent a year writing about a company hunting rutile under the farmland of central Malawi with hand augers, which are giant corkscrews a crew twists into the ground by hand. The augers give up at about eight metres, where the ground gets wet and the sample turns to mush.

In July, Fortuna Metals (ASX: FUN) added up the top eight metres at its Mkanda project and landed on 298 million tonnes at 0.87% rutile, one of the six biggest rutile deposits in the world.

This morning FUN reported its first holes ever drilled below eight metres. The best of them ran 24 metres at 1.5% rutile from surface and was still in rutile when the rig stopped.

The hole went three times deeper than the eight metres in the resource, and its grade was about 70% higher than the resource average.

We’ve held FUN since September 2025, when it was a 4c stock. It last traded at 7.6c, which values the company at about $33 million, and roughly $12 million of it is cash in the bank.

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From 4c to a Top-Six Deposit

Most rutile today goes into paint pigment, welding rods, jet engines and defence hardware, with robot makers the new blue-sky buyer on top.

FUN holds 658 square kilometres 20km south of Kasiya, the largest rutile deposit in the world. Kasiya’s owner Sovereign Metals (ASX: SVM) is worth about ten times FUN at $325 million and has Rio Tinto on its register.

Since buying the ground in September 2025, FUN has sunk 1,323 hand auger holes and turned a 5.4 tonne bulk sample into rutile grading 96.66% titanium dioxide.

In June SpaceX investor WndrCo paid $8.6 million at 11c a share for what is now 18.57% of the company. The maiden resource followed in July at 298 million tonnes grading 0.87% rutile.

What the Deeper Drilling Found

Mlongo is the first Mkanda prospect to get assays back from the 7,618 metre aircore program Fortuna finished in September.

An aircore rig uses compressed air to keep cutting through wet ground until it hits hard rock.

Fortuna drilled the maiden resource with holes 400 metres apart and has halved the gap to 200 metres.

Holes this close let the geologist upgrade the next resource from inferred to indicated, which a mining study needs.

Four holes carried rutile from surface to the last metre drilled:

• 24m at 1.5% rutile

• 25m at 1.17% rutile

• 21m at 1.07% rutile

• 30m at 0.62% rutile

A fifth hole ran 7m at 2.27% from 26 metres down to its last metre. Two metres inside the run graded 3.43%, the highest rutile grade Fortuna has recorded at Mkanda.

A few holes held their grade only in the top eight to 16 metres. Kasiya shows the same pattern of thick rutile cores inside thinner blankets at surface.

We’ve been writing since last November that the ground below the augers was where Mkanda could grow. Sovereign’s resource nearly tripled at Kasiya after aircore rigs drilled it to 20 metres.

A few million years of tropical rain turned the rock at Mkanda into a soft, clay-like material called saprolite, which the rutile sits in.

At Mkanda an excavator tips the clay straight into a truck, compared to the arduous steps of drilling, blasting and crushing that most hard-rock miners have to go through.

The lab separated Fortuna’s bulk sample with gravity, magnets and static electricity.

This is possible as rutile is heavier than the dirt around it, and mineral sands miners have done it this way for decades.

Fortuna had $12.8 million in the bank at the end of July, and hand augers and aircore rigs are some of the cheapest drilling going.

What Comes Next for Fortuna

Fortuna expects results in the next four to six months from its other aircore prospects and 648 hand auger holes, which are at a lab in Cape Town.

Crews started drilling this month at Fortuna’s second project Kampini, which sits 40km south of Mkanda and has about 50km of the same host rock with little drilling into it.

The company’s September presentation has core drilling starting in October and a pre-feasibility study starting in December.

Rare earths are next on CEO Tom Langley's list after that, with the analysis running in parallel with the rutile assays.

Sovereign’s September study showed recovering them as a by-product could add US$722 million to Kasiya’s pre-tax value for about US$29 million of extra capital.

The Robots Are Shipping

Robot makers shipped nearly 25,000 humanoids in the first half of 2026, more than five times the number a year earlier, according to research house IDC. Chinese companies built 78% of them.

IDC expects shipments to pass 750,000 a year by 2030. Research firm Berg Insight has them at 26 million a year by 2040, in a market worth US$554 billion.

Tesla lined up US$30 billion of bank credit in late September, partly to build Optimus.

In early October the robot arm of Chinese carmaker XPeng raised more than US$900 million at a US$6.3 billion valuation, with Tencent and Alibaba among its backers. XPeng plans to start mass production of its Iron humanoid by the end of the year.

Rutile already sells into paint and jet engines, so we see the robots as a bonus on top of a deposit we like anyway.

Our Take on Fortuna Metals

Today’s assays are the first from below eight metres at Mkanda. The Kahuna and Agogo prospects are next, with the rest of the 7,618 metre program behind them.

If they carry their grade as deep as Mlongo, we think the next resource could be a good deal bigger than 298 million tonnes, and Mkanda could move up from its current place in the world’s top six.

An independent geologist still has to turn the assays into tonnes, and Fortuna hasn’t put a date on the update.

We’re also watching the graphite assays from the deeper holes, and whether WndrCo brings a US partner to the table.

At 7.6c, FUN is close to double our 4c entry and below the 11c WndrCo paid in June.

Take the cash off the $33 million market cap and investors are valuing a top-six rutile deposit at roughly $21 million, against $325 million for Sovereign 20km up the road.

It’s a small batch of holes with decent grades, and the rest of the program has to back it up.

CEO Tom Langley said on site late last year he wanted to prove the rutile ran down to 20 or 25 metres, and today’s best holes carried it as deep as 33.

We like his chances of finding the same at Kahuna and Agogo.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 1,504,000 shares of FUN at the time of publishing this article. Equities Club has been engaged by FUN at the time of writing.

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His company now has more than 800 shops and sells things for much more than a shilling (about 10 cents). Coles collected $45.6 billion through the tills last FY and on Friday was valued around $30.6 billion.

112 years later, Firmus is the upcoming float every fund manager and newspaper in the country is talking about. It started life as a bitcoin miner.

These days it owns data centres full of the computer chips to run AI, and has contracts to rent them to the owner of Facebook and the maker of ChatGPT. It has two running and five more on the way.

The fundies start bidding on Tuesday, and the $11 a share they’ve been asked to pay makes Firmus worth $43.7 billion.

Firmus expects to lose US$77 million in the first half of this financial year. Coles made $1.09 billion.

One fund manager told the AFR Firmus was the “BHP of the token generation” (we sat with that one for a moment). Another said he’d short it.

Either could be right, and at that price we’d be on the short side. Then again, in 1914 we probably wouldn’t have backed the bloke selling mixing bowls.

Firmus is too big for us to touch either way. In our neck of the woods the drone company we’re bullish on started shipping again and one copper hole added $20 million to an explorer’s value.

This also caught our eye:

• KTK begins shipping again as demand continues to build

• Lynas bids for a rare earths stock that traded at 1c in 2022

• EVG sells its first container of graphite into Vietnam

• Paradigm calls in the administrators after its trial failed

• 10X finishes drilling at Balerion and heads to Black Hammer

• Boa hits 22m at 3% copper and adds $20 million in value

• Mamba and Micro-X run again a week after we wrote them up

• Northern Star knocks back a $38.7 billion offer from Gold Fields

• Liontown commits $389 million to expanding Kathleen Valley

Let’s get to it.

KTEK Aerosystems Starts Shipping Again

We heard the sobering stat this week that a Russian soldier’s life expectancy once they reach the frontline of the Ukraine war is about 20 to 30 minutes.

It came from Torsten Reil, co-founder of European drone maker Helsing, who said drones have made the front so deadly tanks are basically useless and he expects armies to stop sending people onto the battlefield at all.

He argued 100,000 strike drones on a country’s border could stop any land war, and it’s no doubt the thinking that lies behind the Pentagon asking Congress for about US$75 billion for drones and counter-drone systems next year, and Australia committing up to $22 billion over the decade.

Our drone company KTEK Aerosystems (ASX: KTK) builds the wings and body sections for military drones, and on Wednesday it started shipping to its biggest customer again.

The Pentagon prefers American-made parts, and KTK now assembles its airframes in LA.

The Iran war shut KTK’s shipping route in March, and KTK took in just $273,000 from customers in the June quarter. The first batch is now ready for collection, so KTK can start invoicing again.

KTK’s partner factories built about 50 airframes a month last year. They can now build 200, which KTK puts at $1.66 million a month at last year’s prices.

One of Israel’s three big defence contractors placed its first order a fortnight ago. Founder Dekel Keisar ran drone structures at Israel Aerospace Industries before he started KTK, and he still owns 36% of it.

KTK closed the week at 17c, about $24 million. We paid 20c at the float in May and we’re bullish on the next 12 months.

We sat down with chairman Howard Digby last week. He’s also a director of drone communications company Elsight (ASX: ELS), which has gone from 45.5c in mid-2024 to $5.32 on Friday.

Digby told us he isn’t brave enough to pick the winning drone maker, so he backs the companies that sell to all of them.

The video is below.

Lynas Bids for Meteoric Resources

A share that traded at 1c in mid-2022 got a takeover offer worth about 28.6c on Thursday.

Lynas Rare Earths (ASX: LYC) digs rare earths at Mt Weld in WA and processes them in Malaysia. It calls itself the only commercial producer of separated rare earths outside China. (Rare earths go into the magnets inside EV motors and missiles).

Meteoric Resources (ASX: MEI) owns Caldeira, a clay rare earths deposit in Brazil. It bought the rights in December 2022 for US$20 million from a family who had dug the clay for over 100 years to make bricks.

LYC wants MEI.

Lynas is paying in shares, 0.0207 of a Lynas share for every Meteoric share, so the offer rises and falls with the Lynas share price.

On Lynas’ price before the deal the offer came to 28.6c, a 68% premium, and valued Meteoric at about $968 million.

Lynas fell 8.6% on the day, and at Friday’s close of $12.95 the offer is worth 26.8c.

A punter who put $1,000 into Meteoric at 1c would be swapping it for about $26,800 of Lynas shares just four years later. Good business.

Lynas is also lending Meteoric up to $110 million. Meteoric got $35 million at signing, and the other $75 million only comes if the deal is still alive in six months.

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Evion Group Sells Its First Container Into Vietnam

David Round runs Evion Group (ASX: EVG), the graphite and fluorspar company in our portfolio, and a few weeks ago he was at a defence conference in Philadelphia where robots walked the floor and he got to play with the guns.

He told us every piece of kit in the room had expandable graphite in it somewhere.

Expandable graphite swells up when it gets hot and smothers a fire, which is why it goes into fireproofing for warships and armoured vehicles.

China produced 82% of the world’s natural graphite last year, and since December 2023 its exporters have needed a government licence to ship it.

EVG makes expandable graphite at a plant near Pune in India, through a 50:50 joint venture called Panthera.

This week Panthera sold its first container into South-East Asia. A buyer in Ho Chi Minh City ordered about 20 tonnes at US$3,650 a tonne.

Panthera sold to the US and Europe last financial year for between US$3,100 and US$3,400 a tonne, so Vietnam paid 7% more than its best price.

The container is worth about $104,000 across the joint venture and EVG owns half. It’s small money (we said the same about KTK’s first order), but these things have a tendency to grow quickly over time.

The plant sold 720 tonnes last year and is working towards 2,500 tonnes a year, so we’ll be watching for repeat orders. Managing director David Round says Panthera is negotiating ongoing supply with the same buyer and talking to buyers in Japan.

Round has also been in Washington with Arthur Sinodinos, the former Australian ambassador EVG signed as an adviser in June, and he told us Sinodinos got them in front of senior Pentagon people.

We like that a buyer in a new part of the world paid more than Panthera’s existing customers on its first order. We sat down with Round for a full breakdown of the next few months:

Paradigm Biopharma Calls in Administrators

A Melbourne biotech worth about $140 million a fortnight ago called in administrators on Wednesday.

We wrote last week about Paradigm Biopharmaceuticals (ASX: PAR) and Zilosul, its injection for the pain of knee osteoarthritis. The drug’s big trial had 538 patients and was stopped at the halfway mark because the early results weren’t good enough to keep going.

A week later the board says Paradigm owes more in the short term than it can pay. FTI Consulting now runs the company and the directors’ powers are suspended.

Creditors meet on Friday. The board wants a deed of company arrangement, a deal where creditors agree to take less or wait longer so the company survives in some form.

Shareholders stand last in the queue behind the lender and every other creditor. The shares last traded at 24c, they stay suspended, and Paradigm expects the process to take at least eight weeks.

We said last week we like biotech, and a failed trial taking the whole company with it is the risk every holder signs up for.

Exultant Mining Heads to Black Hammer

The last lab results from Balerion came back on Thursday for Exultant Mining (ASX: 10X), the NSW explorer in our portfolio.

Balerion is a silver and zinc prospect on 10X’s Peak View project near Cooma, and 10X drilled six holes there in August. Five of the six holes hit metal, and the best ran 11.75m at 9.12 grams a tonne of silver and 1.43% zinc and lead from 240m down.

The grades are modest and the zone gets thicker the deeper 10X drilled. The team did what it said it would do, but it’s time to park Balerion and move on.

The crew has been at Black Hammer since early September. It’s 390 square kilometres of copper-gold ground in the same belt as Newmont’s Cadia, one of the biggest gold and copper mines in the world, and its three best targets have never been drilled.

10X closed at 13c, a valuation of about $5 million, with $3 million in the bank. We think it’s cheap, and a copper discovery at Black Hammer could move it a long way.

Boa Resources Hits 22m at 3% Copper

Speaking of copper, a WA explorer drilled 22m at 3.05% copper this week and its shares went from 10.5c to 17.5c.

Boa Resources (ASX: BOA) hit it at Ricci Lee, a prospect on its Neds Creek project in the same district as Sandfire’s old DeGrussa copper mine.

The hole struck copper from 250m down, and 9m of it ran 6.86%. (Boa hasn’t worked out the true widths yet.) Plenty of the world’s big open pit copper mines dig rock grading under 1%.

The same hole found a second copper zone higher up, 10m at 1.81% from 133m.

Boa has drilled 46 holes at Ricci Lee and the lab still has 36 of them, so more results land between now and Christmas.

Boa owns 49% of the ground today. Shareholders vote on October 12 on a deal to buy the other 51%, along with a couple of copper deposits next door.

Last Friday Boa was worth $30.5 million, and it finished this week at $50.9 million.

Buyers are still paying up for copper juniors with real hits, and we’re still hunting for one to add to our portfolio.

Mamba Exploration and Micro-X Run Again

Peter Cook founded Westgold, a $5 billion gold miner with a mill at Meekatharra. On Friday he signed on as an adviser to a copper-gold explorer just down the road he already owned shares in.

The explorer is Mamba Exploration (ASX: M24). We wrote about it last Sunday at 3.6c, after it went back through old drilling and found 165 copper hits in 47 holes.

Mamba announced Cook and a $6 million raise at 3.8c on Friday morning, and by the close its shares were 7.1c.

Mamba will spend the money on 6,000m of drilling at Meeka East starting this month, with first results due in December.

Micro-X (ASX: MX1) was another we mentioned last Sunday. It had tripled to 4.5c in a week after its chairman bought shares on market.

It builds X-ray scanners light enough for an ambulance, and the US Department of Homeland Security is paying it to design an airport checkpoint where passengers screen themselves.

On Monday the department gave it another US$750,000 to build a better baggage scanner over the next eight months, and the stock closed the week at 6.2c.

A fortnight ago Mamba was 2.1c and Micro-X was 1.8c. The ground can move quick in this game.

Northern Star Knocks Back Gold Fields

Now to the big boys, the week opened with the owner of Kalgoorlie’s Super Pit turning down a $38.7 billion takeover offer.

Northern Star Resources (ASX: NST) confirmed on Monday it had rejected South Africa’s Gold Fields, which offered 0.3125 of its own shares plus $7.25 cash for each Northern Star share.

Gold Fields’ shares have fallen since it made the offer, so the $27 a share it started at was down to $25.19 by Monday.

Chairman Michael Chaney called the offer highly opportunistic and said the price fell well short. He also said most of it would be paid in shares in Gold Fields, which has mines in riskier countries than Northern Star does.

Northern Star sold 1.54 million ounces of gold last financial year for an average of $4,925 each, and they cost $2,698 each to dig up.

Both companies have bought a junior with a discovery in the past 18 months. Northern Star paid $5 billion for De Grey, which found the Hemi deposit in 2020, and Gold Fields paid $3.7 billion for Gold Road, which found the Gruyere deposit in 2013.

The big gold miners are flush with cash at the moment, and we don’t think their appetite for juniors making discoveries has dulled.

Liontown Commits Big to Kathleen Valley

Lithium major Liontown (ASX: LTR) signed off $389 million on Wednesday to make its WA mine half as big again, and on Thursday its holders sold the stock down 15%.

They sold because it’s a big bill and it won’t bear fruit until 2028, when the bigger mine starts producing.

Lithium carbonate is still about double its 2025 low, even after it fell 22% in September.

It’s Liontown’s second spend on lithium in a month. Four weeks ago we wrote about it buying into a salt flat in Argentina.

The WA mine is Kathleen Valley. It processes 2.8 million tonnes of ore a year and the expansion takes it to 4.2 million.

Spodumene concentrate is what Liontown ships to battery makers. It expects to produce 390,000 to 440,000 tonnes this financial year and about 780,000 tonnes a year from 2030.

A bigger mine is cheaper to run per tonne. Liontown expects each tonne to cost $840 to $920 to produce after the expansion, down from $1,050 to $1,250 this year.

It will pay for the build from the $561 million it had in the bank at June and from what the mine earns along the way.

What We’re Watching Next Week

It was a bit of a quieter week on markets this week.

Daylight saving kicked in this morning, so a reminder the ASX opens an hour earlier for anyone in a state without it from tomorrow. We’ll be up for it, because a few companies in our portfolio are drilling or waiting on the lab.

September quarterlies start landing this month too, which show how much money each junior has left.

China is also back from its National Day holiday on Thursday. Copper hit a record last month but just had its worst week since April while its biggest buyer was away.

We’re bullish copper and want to see if China’s factories keep buying at about US$14,250 a tonne.

And on Tuesday the fundies start the bidding for Firmus, the biggest float in Australia since Telstra and probably the most talked about since Guzman y Gomez. A fair bit to watch in the weeks ahead.

Till next week.

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Buying CBA shares at $9 is what sensible people did with their money in 1995. We’re small-cap people and we like backing the underdog, so we bought a Freo Dockers membership and left it on direct debit.

CBA closed above $150 on Friday, but for a few fleeting moments yesterday we thought we’d made the better investment.

Freo went 17 points up with four minutes to go and the bells tolled for Wharfie Time. Tears welled in the eyes of grown men who had never seen their side win a flag.

Then Brisbane kicked four goals in four minutes, and the same men cried again.

The small-cap end had a better week than we did. An Israeli defence prime handed our drone company a contract, MRD found richer dirt outside its resource, copper set a record the day before the world’s biggest copper mine shut, and a chairman bought his own stock under 3c and watched it triple.

What caught our eye this week:

• KTK lands an Israeli defence prime

• MRD finds scandium 8km past the resource line

• Rare earths on the table at the Trump-Xi summit

• Copper hits a record and Escondida shuts

• Micro-X triples after the chairman buys in

• Italy votes for nuclear as POW gets to work

• Saudi pays a quarter of the drilling bill

• Paradigm's knee trial fails at half-time

• AMD hits a trillion and Firmus heads for the ASX

KTK Lands an Israeli Defence Prime

Ukraine sent more than 1,000 drones into Russia last weekend, and on Monday morning one of Israel’s three big defence contractors placed an order with our drone company KTEK Aerosystems (ASX: KTK).

KTK builds the wings and body sections that go inside military drones, and the prime has ordered the drawings for a new part. The order is binding and worth US$200,000, the first payment on a US$994,100 design package.

The package covers the drawings and the stress work to prove on paper the part holds together before anyone builds one. Prototypes and production come as separate orders if the design gets through, and KTK puts the design work across the wider program at around US$5 million.

The customer’s name stays secret for national security reasons, so we spent Monday going through the annual reports of Israel’s defence companies to narrow down the list. Three fit the description and each turns over about US$7 billion a year.

Founder Dekel Keisar ran UAV structural engineering at Israel Aerospace Industries before he started KTK, and he still owns 36% of it.

KTK finished last week at 17c. The stock opened on the news Monday and hit 24c before sellers pushed it back down.

US$200,000 is small money (we said as much on Monday). We’re backing KTK on who’s paying it, and those three companies finished last year sitting on US$80 billion of orders they haven’t built yet.

KTK turned over A$5.5 million last year, so the US$5 million design program would be bigger than the whole business, and the order to build the part comes after that. At 17.2c the stock costs 0.2c more than it did before the prime turned up, and the airframes held up by the war since March should start shipping again in the next fortnight.

MRD Finds Scandium Past the Resource Line

Drillers left thousands of bags of crushed rock behind at Grass Patch over the years, and our critical minerals explorer Mount Ridley Mines (ASX: MRD) has been sending them back to the lab to test for scandium.

Grass Patch is MRD’s clay deposit 25km north of Esperance, and it already holds the world’s biggest reported scandium resource at 946 million tonnes.

The resource only counts the ground MRD has drilled closely enough to sign off on, and the second batch of re-assays came from old holes outside it.

The scandium keeps going. MRD found it up to 8km past the resource, at better grades than the ground it has already counted.

The best hole ran 22m at 119ppm scandium oxide from 12m down, against resource grades of about 75 to 77ppm. (ppm means parts per million, so 119ppm is 119 grams in every tonne of dirt.)

Another hole went 40m at 102ppm from 18m, and the drillers stopped before they reached the bottom of the scandium.

Selectro is the part of MRD that has us most excited. It’s the leach Chris Larder brought to MRD before he became CTO, and last week his team recovered 91.8% of the scandium in their third test on half the chemicals.

Richer dirt through Selectro means more scandium out of every tonne MRD would dig.

Managing director Allister Caird says the re-assay program is only at the midway point. The Phase 2 numbers go into the next resource upgrade, and 2,800 more samples went to the lab on Monday.

When we wrote up Test 3, the lab was floating Grass Patch material to strip out clay before the leach. The bulk sample comes after it, running a much bigger lump of Grass Patch through the half-dose recipe to show whether the lab numbers hold at scale.

Those results also feed the demonstration plant costings we wrote about in August.

MRD closed the week at 4.5c. We bought it at 2.4c in March for the size of the dirt, Chris Larder has since given us a second reason to hold it, and he’s still finding out how little chemical Selectro needs.

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Rare Earths at the Trump-Xi Summit

Xi Jinping landed in Washington on Wednesday for his first state visit in 11 years, and both sides arrived ready to argue about magnets.

China’s customs figures came out on Sunday and showed its rare earth magnet shipments to the US fell 20% in August to 512 tonnes.

Those magnets go into everything from electric car motors to guided missiles, and American officials have complained that Beijing hasn’t held up its end of last year’s trade truce.

On Wednesday night, Treasury Secretary Scott Bessent said the two sides had extended the truce by two months to January 10. The truce keeps US tariffs lower and holds back China’s controls on rare earth and critical mineral exports.

The bigger date is January 1, 2027, and no summit moves it. From that day, US defence contractors can’t supply the Pentagon with systems that have Chinese rare earth material anywhere in the magnet, from the mine to the finished part.

China’s gallium ban runs to a different date. Beijing banned gallium exports to the US in December 2024, then suspended the ban until late November this year, and gallium goes into computer chips and military radar.

Buyers in Rotterdam were paying about US$2,100 a kilo for gallium earlier this year. Inside China it trades for under US$250.

MRD’s Grass Patch made the news this week for scandium, and the same clay holds heavy rare earths and gallium.

Heavy rare earths like dysprosium and terbium keep magnets working at high temperatures, and defence contractors will need them from outside China come January 1st.

MRD boss Allister Caird said this week that the size of MRD’s resource puts the company “on the radar of offtakers, government departments, strategic capital and defence primes”. The Pentagon’s deadline is three months away.

Copper Climbs to a Record as Escondida Shuts

Copper closed at a record US$6.92 a pound in New York on Tuesday night, its sixth rise in a row and 7.9% above where it was six trading days earlier.

Copper trades in two locations. New York is where Tuesday’s record was set, and London, where most miners price their sales, sat around US$14,700 a tonne this week, a touch under the US$14,875 record it set on September 10.

Chinese manufacturers bought heavily before China shuts for the Mid-Autumn Festival this week and National Day in early October, and they paid the biggest premium to bring copper into the country in nearly four years.

On Wednesday BHP shut down Escondida in Chile, the world’s biggest copper mine, after a worker was killed doing maintenance. BHP expected Escondida to produce up to 1.28 million tonnes this year, and it hasn’t said when the mine will restart.

In the same corner of Chile, workers at Antofagasta’s Centinela mine vote this weekend on whether to strike.

Two weeks ago we wrote that the world’s copper mines went backwards in the first half of the year and the spare metal in the London and Shanghai warehouses was down 40% and 85%. None of that has improved, and now the biggest mine of the lot is shut.

A record price makes every tonne an explorer finds worth more to whoever eventually digs it up, and BHP, Rio Tinto and the rest of the big miners mostly buy their next mines from explorers. A price like this puts more cash in their pockets to go shopping with.

We called FMR Resources (ASX: FMR) at 16c in 2025 when its Chilean copper projects went into the company, and it hit an all-time high of 60c this month.

This week a much smaller one moved on holes drilled decades ago. Mamba Exploration (ASX: M24) went back through the old drilling at Meeka East, its copper-gold ground in WA’s Murchison, and found 165 copper hits in 47 holes across a 3km corridor.

The best of them ran 26m at 1% copper and 0.33 grams a tonne of gold from 24m down, and a shallow one hit 10m at 1.3% copper from 2m. Meeka East sits 30km down the same belt of rock from Nanadie, the discovery that made Solstice Minerals a $500 million company.

Mamba ran from 2.1c to 3.6c and closed the week at about a $13 million market cap. It’s planning mapping and soil sampling first, then a drill program to test the gap between the two prospects, which nobody has ever drilled.

At a record copper price a copper explorer doesn’t need much of a hit to move.

Micro-X Triples After the Chairman Buys In

An Adelaide company that builds X-ray machines light enough to fit in a Flying Doctor plane was the biggest mover under $100 million on the ASX this week, and the news that moved it was its own chairman buying shares.

Micro-X (ASX: MX1) makes X-ray and CT scanners around a carbon nanotube emitter, which does the job of the big glass tube in a hospital machine at a fraction of the weight. Its brain scanner is built to spot a stroke in the ambulance, where every minute the patient waits costs brain cells.

The stock had been sliding all year. Perennial Value Management held 6.79% in July and sold it down until it dropped off the substantial holder list on September 3, and by last Friday MX1 was 1.8c.

Chairman Patrick O’Brien has been buying the whole way down. He paid 7c a share in May last year and 8c in the placement in April, and this week his companies bought just over 1.36 million shares on market between 2.2c and 2.9c, roughly $35,000 worth.

By Wednesday the stock hit 5.4c, the ASX sent a speeding ticket, and Micro-X pointed to the chairman’s buying and Perennial’s selling. It closed the week at 4.5c and a $31 million market cap.

Underneath it sits a contract with the US Department of Homeland Security to design the next airport checkpoint, with miniature CT baggage scanners and passengers screening themselves. Micro-X says the contract can pay up to $31.7 million in milestones, and on Monday morning the whole company was worth less than half of that.

A chairman who paid 7c, then 8c, then 2.8c for the same stock is either stubborn or right. We like directors who back their company with their own money, and this week the buyers followed him in.

Italy Goes Nuclear as POW Gets to Work

Italy’s Senate voted 81 to 51 on Wednesday to bring back nuclear power, nearly 40 years after Italians turned their backs on it following Chernobyl.

Belgium scrapped its nuclear phase-out law last year, and Switzerland’s upper house voted in March to lift its ban on new plants. Denmark is studying an end to its own 40-year ban.

Australia still bans nuclear power under federal law, while sitting on more known uranium than any other country (we dig it up and ship it to everyone else’s reactors).

Uranium sat flat this week at just under US$90 a pound.

On Wednesday the US announced plans for its Export-Import Bank to back up to US$7 billion of mining and energy projects in Argentina.

Argentina is where our uranium explorer Powerhaus Uranium (ASX: POW) is hunting. POW is looking for roll fronts, which are long bands of uranium sitting in sandstone underground.

Kazakhstan produces around 40% of the world’s uranium from roll fronts, and it does it without digging a pit. The miners pump a solution down one well, let it dissolve the uranium, and draw it back up another. POW’s ground in Argentina has the same sandstone.

POW CEO Siobhan Lancaster’s team started fieldwork this month at Malbec in Chubut province, where grab samples at surface have run up to 771ppm uranium oxide. (Grab samples are hand-picked rocks and aren’t representative of the grade across the project.)

POW plans 20 to 30 drill holes starting in October or November once permits land, with results expected from November.

Lancaster found and sold a uranium discovery at 92 Energy before this one, and she’s about to put the first rig POW has ever owned on the ground.

We backed POW at its 20c float in August because we want to own the junior before the drill results, and with Europe voting reactors back on and Washington backing Argentine mines, we think a uranium discovery in Chubut would get noticed quickly. News from the field could be close too.

Saudi's Mining Push Brings Small-Caps to the Desert

Saudi Arabia’s government puts the value of the minerals under its desert at US$2.5 trillion, nearly double the estimate it gave in 2016.

Riyadh wants mining to become the third pillar of its economy alongside oil and manufacturing, and it’s paying explorers to come and look. The government’s exploration program covers up to 25% of an explorer’s drilling and lab costs, and spending on exploration in the Kingdom went from US$54.6 million to more than US$280 million in 2024.

The government has handed out more than 33,000 square kilometres of ground through tender rounds. Its ninth round, awarded in January, went to 24 companies.

Gina Rinehart’s Hancock Prospecting formed a joint venture with Saudi state miner Ma’aden in December and picked up five exploration licences in a Saudi gold belt. Rinehart said she was excited by the Kingdom’s pro-mining policies.

China’s Zijin and India’s Vedanta won licences in the Jabal Sayid copper belt last year.

Peako Minerals (ASX: PKO) valued at $36 million completed its purchase of six gold projects covering 862 square kilometres this week. Its flagship sits next door to the 2-million-ounce Sukhaybarat gold mine.

Sierra Nevada Gold (ASX: SNX) won its As Safra copper-gold project in a government tender last December and drilled it for the first time this year. In August it raised $12.3 million for a 25,000m second round.

Three SNX rigs should be turning by September 30, with first assays due in November. The company is worth about $68 million.

A government that pays a quarter of your drilling bill is a rare thing for a junior explorer, and Peako and SNX are two of the first ASX names to take it up. We’ve been spending time on the Kingdom ourselves and expect a few more to follow them into the desert.

Paradigm Fails its Halfway Test

Paradigm Biopharmaceuticals (ASX: PAR) has spent years and a lot of shareholder money on one drug for sore knees, and this week the trial fell over at half-time.

Zilosul is an injection meant to ease the pain of knee osteoarthritis. Paradigm’s Phase 3 trial put 538 patients on the drug or a placebo.

The trial rules gave an independent board a look at the first half of the results to decide whether the study was worth finishing.

The shares had run 40% in the month before the halt. Paradigm went into a trading halt on Monday morning and cancelled the investor lunch it had booked for the result.

On Wednesday it said the interim numbers didn’t reach the threshold the study needed to continue.

The company blames a large amount of missing data on how the trial was run, and it’s going back through the numbers to work out what happened.

On Thursday it handed back US$2 million it had drawn from its note holder Obsidian a fortnight earlier. The stock last traded at 24c, about $140 million of market cap, and it stays suspended until Paradigm tells the market by Monday how much cash it has left.

Six years ago, with the same drug and no Phase 3 result, Paradigm was worth $334 million at $1.69 a share.

We like biotech. When a drug works the payoff is enormous, and when it doesn’t you get a week like Paradigm’s. Its holders took that risk with their eyes open, and it went the wrong way.

AMD Hits a Trillion as Firmus Heads for the ASX

AMD shares jumped almost 10% on Monday to a record, taking the chipmaker past US$1 trillion in market value for the first time. Only three other US chipmakers have got there before it, and Nvidia is still the biggest at about US$5.4 trillion.

A US index of chip stocks, including Micron and Nvidia, rose for a sixth straight session on Tuesday.

In China, Alibaba unveiled a new AI chip it says triples the performance of its last one. It plans to take its data centres past 20 gigawatts by 2032, which is roughly the output of 20 big power stations.

Micron reports its results on September 30.

Closer to home, data centre operator Firmus is chasing about $5 billion in what would be the second-biggest IPO in Australian history, behind Telstra in 1997. Blackstone backs it, Nvidia and OpenAI are customers, and it’s due to list in late October.

On Tuesday, Reserve Bank governor Michele Bullock told a Sydney audience that AI could be a bubble. “Some people think it’s a bubble, some people don’t,” she said, and the RBA is keeping an eye on it.

Every chip going into those data centres is a stack of copper wires, and the wires can only shrink as far as the wrapping around them allows. Our graphene company Adisyn (ASX: AI1) grows the wrapping one nanometre thick, at a temperature a chip factory can live with.

Adisyn was quiet this week in its first week inside the All Ordinaries. We added it at 6.8c in April, and a week of trillion-dollar chipmakers and a $5 billion data centre float is a reminder of how much money is chasing better chips.

What We’re Watching Next Week

The Reserve Bank announces its rate decision at 2:30pm on Tuesday. All four big banks expect a 0.25% rise to 4.60%, which would be the fourth rise this year.

If you’ve got a mortgage, a rise that size adds about $15 a month for every $100,000 you owe. Small explorers feel it too, because most of them raise money every few months and every placement gets priced against what the bank is paying on a term deposit.

BHP still hasn’t said when Escondida will restart. Every week the world’s biggest copper mine sits idle keeps the pressure on the copper price, and explorers with copper in the ground are the ones who stand to gain.

We’re out hunting for our next small-cap copper pick to follow FMR. We want an explorer with copper already in the drill holes and the cash to keep drilling, and a market cap small enough that a discovery moves the share price.

Powerhaus Uranium’s team has been in the field at Malbec since mid-September, and we’re expecting an update soon.

Gold drilling is on our radar too, and we hope to have more to share on the gold side of the portfolio soon.

If you want a piece of Firmus, retail applications for the float open on October 12.

Thanks for the distraction from the footy result. We’ll go back to staring into the abyss now.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 500,000 KTK shares, 900,000 AI1 performance rights, 625,000 POW shares, 2,083,333 MRD performance rights and 303,030 MRD shares at the time of publishing this article. Equities Club has been engaged by KTK, AI1, POW, and MRD at the time of writing.

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We spent Sunday watching drone footage out of Moscow. Ukraine sent more than 1,000 of them into Russia yesterday, and earlier this month a handful out of Iraq shut the Saudi pipeline that lets tankers skip the Strait of Hormuz. Brent crude oil went through US$108, the first time since panic gripped markets in May.

Every defence budget on earth is being rewritten around drones, because a handful of them can hit a major city’s infrastructure or stop 4% of the world’s oil in one night.

KTK builds the wings and fuselage sections that go inside them, and increasingly the whole section, wired and tested, so the drone maker bolts it in and moves on.

The purchase order is binding and worth US$200,000. It’s the first payment on a US$994,100 design package the customer has now accepted.

US$200,000 is small money for a company already doing millions a year in revenue.

We care about who’s paying it.

The announcement keeps the customer’s name secret for national security reasons. It describes a military aircraft manufacturer with more than 10,000 staff and billions in revenue.

We went through the annual reports of Israel’s defence companies and three come close. Each turns over about US$7 billion a year.

The defence industry calls companies like these primes. A government signs with the prime for the finished aircraft, and the prime buys the wings and frames from smaller suppliers like KTK.

A prime this size only signs up a new supplier when there’s enough work to make it worth the bother, and KTK puts the design work across the wider program at around US$5 million.

Nobody at a billion-dollar contractor pays to design a wing they plan to build a handful of.

At today’s exchange rate US$5 million of drawings comes to about a third of KTK’s $24.6 million market cap, and covers design only.

Do the drawings well and KTK is the company that designed the part, so when the prime orders thousands of them KTK is first in line to build them. A supply contract at a prime runs for as long as the aircraft does, and military drones tend to fly for 20 or 30 years.

Suppliers usually spend years getting onto a prime’s books, and KTK has done it 18 weeks after listing on the ASX.

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Who's Paying? We did Some Digging

Three companies in Israel fit the announcement’s description, and here they are with last year’s numbers.

• Elbit Systems turned over US$7.9 billion in 2025 with more than 20,000 staff.

• Israel Aerospace Industries did US$7.4 billion with a US$29 billion order book.

• Rafael came in at US$6.8 billion and has 10,000 employees.

Elbit alone turns over more in a day (about US$21.6 million) than KTK’s whole market cap.

Between them the three turned over US$22 billion last year and are sitting on US$80 billion of orders they haven’t built yet. Israel’s defence exports hit a record US$19.2 billion in 2025, up nearly 30% on the year before, and most of it went out the doors of these three.

Their drone history goes back further than anyone’s. IAI flew the first modern military drones over Lebanon in 1982, and its Heron surveillance drone has since been bought by around 15 countries. Australia flew Herons over Afghanistan for years.

Each of these companies has thousands of engineers on staff and 40 years of drone programs behind it, and one of them has gone outside to an 18-week-old ASX listing to design an airframe part.

Groups this size qualify a supplier once and use it for years. The volumes they order are the reason a wing is worth designing at all.

What KTK Signed

KTK will design a specified airframe component for the prime. The work covers the drawings, the stress analysis and the bill of materials, plus the engineering support to get the part through the customer’s design reviews.

In plain terms, KTK has been hired to draw a part of an aircraft and prove on paper it will hold together, before anyone builds one.

The first US$200,000 pays for preliminary design over three months. The next US$592,700 covers engineering and development over 18 months, and a final US$201,400 covers a year of production and testing support after that. The whole program runs 30 months.

Prototypes and production are outside this package. The announcement says each of those comes as its own purchase order if the design gets through, and there’s no guarantee written into today’s order.

We read it as the try before they buy test, and the prime has put nearly US$1 million behind seeing how KTK goes.

KTK's MD Learned the Trade Inside a Prime

KTEK’s founder and managing director Dekel Keisar was Head of UAV Structural Engineering at Israel Aerospace Industries, where he worked on more than 20 military drone platforms before starting KTK in 2019.

Structural engineering is the skeleton of the aircraft. The wings and frames have to hold together when a drone banks hard at altitude, and a prime signs off on them before anything else gets built.

He built KTK to sit one rung below the primes. It already supplies finished airframe sections to Elbit and to drone maker UVision. The design work stays in Israel and the manufacturing is spread across certified partners in four countries.

Dekel still owns 36% of KTK and hasn't sold a share since listing. He learned how primes buy from inside one, and he wins or wears this order alongside every other shareholder.

Why Every Military Wants Drones

In July last year, US Defence Secretary Pete Hegseth reclassified small drones as consumables that are bought like ammunition and expended by the case.

The Pentagon’s budget request for the year ahead asks for more than US$70 billion for drones and counter-drone systems, up from about US$16.5 billion the year before. It has since asked industry for more than 300,000 small drones across 2026 and 2027, and the US Army wants a million.

In April the Australian Government put at least $12 billion toward drones over the next decade, then added up to $7 billion for shooting them down.

A drone that costs less than a car can put a hole in a refinery, and the missile fired to stop it costs more than a million dollars. Major militaries have all done the same sums.

Every one of those drones needs parts, and the companies whose names go on the side buy most of them from suppliers. KTK is one of the suppliers, and it gets paid whichever brand wins the tender.

What Else is Moving at KTK

The war in Iran shut the shipping route KTK’s biggest customer relies on, and for most of this year finished airframes sat in a warehouse with the buyer waiting on the other end.

Around US$100,000 worth got through in August as a test run. The rest starts moving again in late September or early October.

On the other side of the world, KTK has a building in Los Angeles ready to go. The Dutch export licence it needed landed in August, so European-made parts can now land in California, get assembled, and ship to American customers from an American address.

The Pentagon’s rules favour parts made in America, and from LA KTK’s will be.

Two weeks ago Vestal signed KTK to build its prototype airframes. This morning one of Israel's three defence giants put in an order for it to design part of an aircraft.

We picked KTK at its May float because primes buy airframes from companies like it, and 18 weeks later one of the biggest is.

The parts that sat in a warehouse all year start moving within a fortnight and the LA plant is waiting on its first American order.

One of the biggest aircraft builders on earth has paid KTK to start drawing, and the first drawings go over in three months. If they’re good, the US$5 million follows, and the order to build the part is KTK’s to lose.

We think they’ll be good. Signing off drone wings was Dekel’s job at a prime before he started KTK.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 500,000 KTK shares at the time of publishing this article. Equities Club has been engaged by KTK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

Buffett took control of a failing textile mill called Berkshire Hathaway in 1965 because the bloke running it tried to shave an eighth of a dollar off the price he’d promised for Buffett’s shares. Buffett bought more instead and sacked him.

He paid around US$15 a share back then. One of those same shares closed on Friday at US$763,600.

The whole mill was worth about US$22 million when he took it over. He used the mill’s cash to buy an insurance company, then the insurance company’s cash to buy everything else, and today Berkshire is worth US$1.09 trillion.

His most famous investment is Coca-Cola. He spent US$1.3 billion on the shares between 1988 and 1994 and the stake is worth about US$25 billion today. Coke now pays Berkshire more in dividends every year than the shares cost him.

By Berkshire's own count the shares are up more than 6,000,000% since 1965. A hundred bucks in the mill back then was worth US$6.1 million at the end of last year. The bloke is a legend of the game.

Down the small-cap end this week we saw a fair bit of news despite lower trading volumes, visible gold hit in drill cores in the US, copper continues to attract attention, and a biotech lost a third of its value.

What caught our eye this week:

• ELK hits visible gold in hole one at Friday

• MRD pulls more metal out of Grass Patch on half the chemicals

• Copper juniors: FMR hits 60c and Gina buys into WCN

• Attacks in Saudi send the Oil price north, what it means for juniors

• AI1 gets its third US patent

• Minerals 260 goes from small-cap to $2 billion gold developer

• EVG is in Washington presenting on multiple fronts

• Immutep loses a third of its value on a manufacturing answer

• Where the money went this week: we dive into trading volumes

ELK Hits Visible Gold in Hole One

Elk Range Mining (ASX: ELK) found visible gold in its first drill hole at its Friday gold project this week. Seven specks turned up 122 metres down.

Edward Keys sat down with us in Perth this week, a long way from the mill floor at Friday where he keeps his sleeping bag. The trip home cost him the town’s annual picnic, and the locals let him know about it.

Friday has been mined on and off for the best part of a century, and the town has grown up around it. Friday’s site administrator is fourth-generation Idaho and lives in the cabin her great-grandfather built on a lease he pegged, and the guy scanning the old assay sheets for ELK lives 100 metres from the office and walks up.

It’s all to say Keys arrived in a town that knows the mine better than he does, and he’s hiring from the experienced pool.

Our launch write-up is here and Monday’s piece on the gold in the old core is here.

Keys told us the new hole started eight metres from the 2014 hole, and the new gold sits about 14 metres above the gold his team spotted on Monday in the old core.

“If you think about a big boulder in a stream, you’re going to find those nuggets in the pressure vortex downstream,” Keys said.

“The same physics applies to the gold we’re seeing in the core.”

The veins at Friday pinch and swell, the gold sits just behind the pinch, and now his geologists have seen it in two holes 10 metres apart, they know what to look for in the next seven.

The rig has drilled past the point where the 2014 crew went home (450 feet), and the same veins keep coming up in the core.

It’s now running day and night shift, and the pad for the next three holes is already dug.

The assays for the new hole and the old core land late October or early November.

ELK closed the week at 17c and a $15 million market cap with $10 million of IPO money in the bank, so the market is paying $5 million for a mine someone else spent US$40 million building.

Keys flies back to the mill floor in two weeks.

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MRD Gets More Metal on Half the Chemicals

Our critical minerals explorer Mount Ridley Mines (ASX: MRD) finished the week up 17.5% after its third Selectro test pulled 91.8% of the scandium out of Grass Patch clay on half the chemicals. You can find our full write up here.

Grass Patch is a clay deposit 25km north of Esperance in WA with the world's largest scandium resource in it, and the same clay carries the heavy rare earths that go into EV and wind turbine magnets.

Chris Larder spent a decade building Selectro before he joined MRD as chief technology officer in July and shared the recipe. A leach is the chemical bath the industry uses to pull metal out of crushed rock, and for clay like this everyone uses hydrochloric acid.

Every test came out of one bucket. The lab ground 16.8kg of Grass Patch core into one lot and took a 90 gram scoop for each run, so the acid and the three Selectro runs all started from the same dirt and the only thing changing between them was the recipe.

The acid got 27.6% of the scandium out. Selectro got 62.1% on its first run and 80% on its second, and on Thursday Larder halved the reagent and got 91.8%.

“Being able to manage the process to get outcomes like that is genuinely exciting,” Larder said.

Dysprosium is the heavy rare earth inside EV and defence magnets, and it went from 39.4% under acid to 85%. Gallium went backwards to 41.5% from 55.8% in August because the same cut in reagent took it down, and MRD expects a richer feed from flotation to claw it back.

We backed MRD at 2.4c in March for the ground they had, and three tests in we think the process might be worth more than the ground.

After the bulk sample MRD wants to run Selectro over another company’s clay. If it works there, MRD clips the ticket on a deposit someone else digs, and there are a lot of clay rare earth projects out there looking for a cheaper leach.

Copper: BHP Now Makes More From It Than Iron Ore

Copper set a record of US$14,875 a tonne a few weeks ago.

We wrote in August about copper making BHP more money than iron ore for the first time in its history, and we’ve written “we’re hunting for a copper junior” in every wrap since.

This week two we’d already put in front of readers ran without us.

FMR Resources Hits 60c

We called FMR Resources (ASX: FMR) at 16c last year when the Chilean copper ground went into the company.

This week it hit an all-time high of 60c, up nearly 300% from our call.

FMR hunts porphyry copper in Chile. Porphyries are the big low-grade systems the majors mine, and FMR now has three of them north of Santiago.

Managing director Oliver Kiddie picked up La Lorena in May because it sits on the same structure as Los Pelambres, which Antofagasta runs as one of the biggest copper mines in Chile, and rock chips there ran 5.32% copper.

FMR optioned Los Warbos in July and its rock chips ran 10.77%. Neither has ever been drilled.

FMR is paying for the drilling at Llahuin to earn up to 60% of the project, and four holes there have confirmed a porphyry system with the main centre due to be drilled this quarter.

Legendary prospector Mark Creasy cornerstoned the drilling money, and the top 50 holders own 65% of the register.

Gina Rinehart Buys Into White Cliff Minerals

White Cliff Minerals (ASX: WCN) made our broker picks for the second half of 2026 at 1.7c in July.

On Monday Gina Rinehart’s Hancock Prospecting agreed to put $8.77 million into WCN at 1.7c for 13.5%, and the stock hit 2.4c. Shareholders vote on it in October.

The money goes into Rae, WCN’s copper project in Canada’s far north, where drilling at Danvers hit 175 metres at 2.5% copper. Hancock pays for the drilling, and when Australia’s biggest private company buys into a junior at market price, the next raise gets a lot easier.

We’ve spent six weeks looking for the perfect copper junior while two we’d already named went and did it.

Oil: The Pipeline Attack and Your Diesel Bill

Last week we told you to fill the car up before the weekend. Six months after Hormuz shut, drones hit Saudi Arabia’s East-West pipeline on 11 September, and the pump price has kept climbing since.

The pipeline is the one route for Saudi crude that skips the Strait, and knocking it out took up to 4% of the world’s supply off the table.

Brent jumped from US$96 to US$104 in the week it happened, touched US$108.75 on Tuesday, and closed this week at US$103.87 once the Saudis said the line would restart within days.

The fuel excise cut ended in early August and Treasurer Jim Chalmers says it’s staying ended. Australia holds about a month of fuel, and most of the diesel we burn comes in on a ship from Singapore or Korea.

Diesel is the biggest line on an explorer’s bill. Rigs, trucks and generators run on it, so every dollar on the barrel makes a metre of drilling dearer, and a junior with a year of cash gets a shorter year.

AI1 Gets Its Third US Patent

Our tech graphene play Adisyn (ASX: AI1) had its third US patent allowed this week.

We added AI1 to our portfolio in April at 6.8c, and it closed the week at 14c off the back of the news.

Every chip is a stack of copper wires, and each wire is wrapped in two layers. A barrier layer stops the copper leaking into its surroundings, and an insulating layer keeps one wire’s signal from bleeding into the next.

As chips shrink under five nanometres, the wires get thinner but the wrapping can only get so thin before it stops working. Engineers call the space lost to wrapping the barrier tax.

Adisyn grows graphene one nanometre thick at under 400 degrees, cool enough for a chip factory. The first two patents covered laying it on the copper. This one covers laying it on the insulator, so AI1 now owns the recipe for both sides of the barrier.

For a company like this, a patent is the difference between a lab result and something a chipmaker will pay to license. Executive chairman Kevin Crofton spent 30 years selling equipment to those chipmakers, and he now walks in with three allowed US patents and a 200mm wafer.

From Monday AI1 joins the All Ordinaries, the 500 biggest companies on the ASX, which puts it inside the size limit a lot of fund managers work to.

Minerals 260 Grows From Small-Cap to $2 Billion

In January last year Minerals 260 (ASX: MI6) was an 11c explorer with Tim Goyder in the chair, the size of company we write about in this wrap every week.

Then it wrote a $156.5 million cash bill, added $10 million in shares, and bought Bullabulling, an old open pit gold project 65km west of Kalgoorlie with 2.3 million ounces already in the ground.

The bill was many times what the whole company was worth at the time.

Eighteen months on, the resource sits at 190 million tonnes for 6.2 million ounces, nearly three times what they paid for, and Franco-Nevada, the biggest gold royalty company on earth, has put $420 million into the project since February in its largest commitment ever made in Australia.

This week MI6 raised another $250 million at 88c (no discount to the share price) with a $30 million share purchase plan for the retail holders who backed it early. The company now has $633 million towards an $855 million mine, with first gold pencilled for 2028.

MI6 closed the week at 94c, a touch over $2 billion. Eight-and-a-half times the price on the day they bought the ground, and they are still years away from pouring gold.

EVG Gets a Second Door Into the Pentagon

The US hasn’t mined fluorspar since 1995 and imports every tonne it uses, which is a handy fact to have on your side when you’re asking the Pentagon for money.

Our graphite and fluorspar company Evion Group (ASX: EVG) was accepted into the Defense Industrial Base Consortium this week, the second US defence buying group it has joined since August.

Members get to see the Pentagon’s requests before anyone else and bid on them, and this one has handed out US$362 million across 51 projects since 2024, with US$159 million of it going to critical minerals.

EVG turns up with two minerals the Americans desperately want. Carp is an old fluorspar mine just over 100km out of Las Vegas. On the graphite side it has a fully permitted mine in Madagascar and a plant in India making the fireproofing material for warships and armoured vehicles, which hardly anyone outside China makes.

None of the US$362 million has come EVG’s way yet. The next time the Pentagon puts money up for fluorspar or graphite, EVG is on the list of companies allowed to ask for it.

And the Carp rock chips are still at the lab.

Immutep Falls 32% on a Manufacturing Answer

A Sydney biotech with one drug lost a third of its value this week for telling the market why its big trial failed.

Immutep (ASX: IMM) makes efti, which is meant to wake up the immune system so it attacks tumours. Biotechs like this earn nothing for years. They raise money and run trials, and the share price lives or dies on what the patients do.

In March Immutep stopped its Phase 3 trial in lung cancer. Half the patients got chemo and Keytruda and the other half got chemo and Keytruda plus efti.

Chemo and Keytruda is the standard treatment for that cancer, and the patients who got efti on top finished about level with the other half.

The stock lost about 90% of its value in one day.

Friday last week the company said it thinks it knows why. The drug in the failed trial was brewed in a 2,000 litre tank. Every earlier trial that worked used a 200 litre tank, and the bigger batch came out with a slightly different sugar coating on the protein.

So Immutep has ordered a fresh 200 litre batch and plans new trials in head and neck cancer and sarcoma, starting in the second half of 2027.

Holders sold anyway. IMM fell from 5.7c to 3.8c on nearly $6 million of turnover, because a reason for the failure is two years and a lot of money away from a result.

Where the Money Went This Week

If it feels like nobody is trading the small end lately, you have company. This week we pulled the turnover for every one of the ~1,800 companies on the ASX to find out how much money has left our end of the market.

The whole market did $56 billion of trade this week. A month ago it did $46 billion and this time last year it did $53 billion, so on the face of it the market is busier than it was.

Friday alone did $22 billion, that’s because the third Friday of September is when S&P rebalances its indices and the futures expire, so every index fund in the country has to trade at the close.

Take Friday out and the big end did $34 billion against $29 billion a year ago. The ASX 200 is down 3.6% since August, so most of the extra was people selling.

The ~1,000 companies under $100 million in market cap traded $179 million for the week. The same week a year ago they traded $390 million, and back then the gold and copper fever had punters buying anything with a drill rig in the photo.

Punters are still trading, they have just moved up the register. Winners like MI6 graduated out of the small end and took their turnover with them, and the investors still down here have stopped buying on a drill photo.

They want a real asset and a management team with a track record before they part with their money. These are the type of opportunities we chase as small-cap investors.

What to Watch this Week

AI1 joins the All Ords on Monday, and the quarter ends on Wednesday, so every junior on the ASX is counting its cash for the September quarterly.

The drones hitting Saudi pipelines keep oil above US$100, and the ones KTK builds start shipping again this month with a new Israeli customer on the books.

Copper sits near its record with the Chinese back from holiday on 8 October, FMR drills in the coming weeks as our copper junior search continues.

Gold is at US$4,392 and ELK’s assays land late October. Until then Keys has seven more holes to drill and a picnic to make up for.

Most importantly, Freo’s in the AFL grand final next Saturday, which is a sentence we've waited a long time to write. It's wharfie time. We hope. And we can’t vouch for the quality of next Sunday’s piece if they get up.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares, 900,000 AI1 performance rights, 4,500,000 shares in EVG, shares 2,083,333 MRD Performance rights and 303,030 shares at the time of publishing this article. Equities Club has been engaged by ELK, AI1, EVG, and MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services Licence (AFSL) No 519872.

Grass Patch is a clay deposit 25km north of Esperance in WA. It holds heavy rare earths, light rare earths, gallium and the largest scandium resource on the planet (China would prefer the rest of us went without every one of them).

This morning MRD pulled 91.8% of the scandium out of the clay, up from 80% in August, using half the chemicals. Every rare earth number went up as well, and the only metal that went backwards was gallium.

We knew in March that a resource is only worth something if the metal comes out of the clay at a price worth paying, and back then the first metallurgical test was still two months away.

Then Chris Larder turned up. He brought with him a leach process he'd spent more than a decade building, named Selectro. He then took the chief technology officer job and handed MRD the recipe.

A leach is the chemical bath that pulls metal out of crushed rock, and for clay like this the whole industry uses hydrochloric acid.

In August, Selectro went head to head with the traditional acid on the same Grass Patch sample. We wrote it up here and said the process might end up worth more to MRD than the ground it sits on.

After today we're more convinced of it. Three tests in, the recoveries have gone up every time, and the bulk sample that proves it at scale is next on the list.

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Half the Dose

Larder cut the reagent dose in half for the third and final test of the program, which MRD released today. The heavy rare earths averaged 84%, which beats the best single heavy rare earth result from August, 83.1% on terbium, and the lights came in at 77%.

The reagent is the chemical in the bath and one of the biggest running costs in a leach circuit. Selectro already runs it in a closed loop, so the same chemicals go round and round like the bags at an airport.

Now it needs half as much to begin with, and Larder says he hasn’t found the bottom of the dose.

“The results make it clear that tuning delivered material improvement, with scandium recovery increasing from 80% to 91.8% while the reagent dose was halved. Being able to manage the process to get outcomes like that is genuinely exciting.”
- Chris Larder, chief technology officer, Mount Ridley Mines

MRD trades at a $67 million valuation, the share price is up 75% from when we told readers we had added it to our portfolio. It has since claimed the world's biggest scandium resource and patented the Selectro process to pull it out.

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Three Tests, One Bucket

Every test in this program came out of one bucket. A lab ground 16.8kg of Grass Patch drill core into one uniform composite. Each test ran on a 90 gram scoop of it, so every run started from the same dirt.

The acid went first. Selectro then went three times, and Larder fine-tuned the recipe between each run.

Scandium recovered 27.6% with the acid. Selectro knocked it out the park with 62.1%, 80% and then finally 91.8%.

Dysprosium is the heavy rare earth inside the magnets in EVs and defence systems, and it fetches the highest sales price. It doubled from 39.4% under acid to 85% with Selectro.

Neodymium, the light rare earth that does the volume in the magnet trade, went 30.2% under acid, then 55.2%, 75.2% and 81.7%.

Test 3 was the reagent test. Larder halved the dose and got the best numbers of the program, on raw feed straight out of the ground, before any concentration step and before anyone had tried to optimise the recipe.

The announcement says MRD is still to find the lower limit of reagent concentration, so the next run pushes the dose down again.

Selectro also hit its top recoveries inside four hours in a test that ran for 24. It runs at low temperature and normal air pressure, which Larder ties to an operating cost profile he calls “potentially very attractive”.

Gallium and the Dose

Gallium went the other way. Test 3 pulled 41.5% of it, down from 55.8% in August. The same cut in reagent that lifted scandium and the rare earths is what took gallium down, so each metal has its own sweet spot on the dose.

MRD's next job is finding the dose that suits all of them, and it expects reagent tuning and a richer feed from beneficiation to claw the gallium back. Even at 41.5%, Selectro is miles ahead of the traditional acid, which recovered 0% of the gallium.

What Comes Next

The lab is floating Grass Patch material right now. Flotation runs crushed ore through a frothy tank of water and air, where the minerals you want ride the bubbles to the top and the clay sinks.

Lab work in August found the rare earths sit in phosphate minerals, which float well. Binning most of the clay before the leach hands Selectro a richer feed, and less clay in the tank means less reagent spent on clay.

Then comes the bulk sample, which is the one we’re waiting on. Every test so far has run on a handful. The bulk program runs a much bigger lump of Grass Patch through both the half-dose recipe from Test 3 and the floated concentrate, and shows whether the lab numbers survive being scaled up.

The Test 3 numbers also go into updated process economics and scoping assumptions, feeding the demonstration plant costings we wrote about last month.

Last on the list is running Selectro over another company’s ore. If the process works on third-party feed, MRD gets paid on a deposit someone else digs, and the number of clay rare earth projects looking for a cheaper leach runs well past Grass Patch.

“We haven’t yet established where the reagent concentration breaks for the process, providing further opportunity to optimise the reagent dose and recovery of targeted individual minerals.”
- Allister Caird, managing director, Mount Ridley Mines

Three tests ago the acid was leaving 72% of the scandium behind. Selectro is now leaving 8%, on half the chemicals, and Larder is yet to find the floor of the dose.

The bulk sample decides whether these numbers hold at scale, and we're backing them to hold. At 4.2c and a $67 million valuation, we think you're paying for the dirt and getting the process thrown in.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club has 2,083,333 performance rights and 303,030 shares in MRD. Equities Club has been engaged by MRD at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

It’s sitting in a tray of drill core from 2014, in the last metre of the standout hole from the old drilling. The specks and threads of gold in the quartz are big enough to pick out without a lens.

The core has been on a shelf in the shed at Friday since the day it came out of the ground. Friday is the built and permitted underground mine Elk bought this year. It came with the shed full of trays of old rock with the original sample numbers still in them.

Elk’s geologists have started working through those trays and assessing the core again with fresh eyes. They laid this hole out in order and on the final tray one of them saw gold in the metre before the hole stopped.

We’ve written about this hole twice, when we backed ELK at the float and again when the rig started turning. It ran 112 metres at 5.22 grams of gold a tonne and got better the deeper it went until the last three-quarters of a metre came back at 133 grams.

Then the crew reached 450 feet (the depth on their drilling plan) and pulled the rods out. That’s as far as the story went for the next 12 years.

ELK trades at 16.5c, a market cap of roughly $15 million, having just raised $10 million in the IPO. For a company with these grades, sitting on visible gold the last crew walked straight past, we think the market wakes to ELK quickly.

Two Tablespoons

The gold Elk found sits inside the 133 gram interval, and the people logging the core in 2014 missed it. Missing it changed the number the lab sent back because of the way a lab works out a grade.

A lab never tests the whole metre. It crushes the rock to powder, scoops out about two tablespoons, runs that through a fire assay and uses the result as the grade for the metre.

When the gold is scattered evenly through the rock, two tablespoons tells you pretty well what’s in the metre.

The gold at Friday is coarse. Elk calls it nuggety in the fine print and nuggety gold bunches into specks that can carry a lot of the gold in a metre.

If the speck lands in the two tablespoons the number can come back huge. If it lands in the bag left behind, the number can come back small.

The old owners knew this and had a rule to send any sample with visible gold back for a much bigger test.

The rule never kicked in back in 2014 because the geologist logging the metre wrote down the core but missed the gold.

When Elk went through the original assay certificates it found only the standard two-tablespoon result for the metre and for the whole 113 metres of the 2014 hole.

Elk has now sawn the remaining core again along the full 113 metres and sent it off for photon assay in the same sample lengths the 2014 crew used.

Photon assay fires X-rays through a 500 gram jar of rock and reads the gold in the whole jar. Ten times the rock means the speck has nowhere to hide. Results are due late October or early November.

The number could come back higher or lower than 2014. The new sample comes from a different quarter of the same core. Two slices of one metre can grade a long way apart in nuggety ground and Elk says so in the announcement. What it will be is the first measure of those 113 metres taken with a test built for the gold in them.

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Eight Metres Away

The drill rig spinning right now is a stone’s throw from all of this.

Elk started its first hole eight metres from where the 2014 crew started theirs and the two run side by side down the hill. The gold in the photo sits 137 metres down. The new hole passes within 10 metres of it.

Then it keeps going another 200 metres into fresh ground past where the old crew pulled their rods.

As CEO Edward Keys put it, the gold sits “immediately adjacent to where we are drilling today.”

Elk has put the drill on day and night shift to get there quicker and the assays from the new hole are due in the same late October to early November window as the re-test.

So two sets of numbers land on the same patch of hillside within weeks of each other. One tells us what the old hole graded when it’s measured properly. The other tells us what’s underneath it.

Why We’re Backing Elk Range Mining

You can find our full write-up on why we’re backing ELK here.

Two Numbers in November

Elk gets two results back in November and both can move the stock.

The old numbers for this hole came from a test that struggles with coarse gold. A two-tablespoon scoop can miss the specks altogether, which makes the result a lot more hit-and-miss in nuggety rock. Elk is redoing the whole hole with ten times the rock.

There are 386 old holes at Friday and the crews graded nearly all of them the same way, so whatever comes back on this hole tells us something about every tray in the shed.

The new hole is the bigger swing. Elk is drilling straight past where the 2014 crew stopped and another 200 metres into ground nobody has tested. If the gold keeps going, Friday is a much bigger mine than the one the last owner built, and the mill and the decline are already sitting on top of it.

High-grade holes get paid for quickly in this gold market, and Friday has a history of them.

We’ve held since 20 cents and we’ll be holding in November.

The last crew went home at 450 feet. This one is drilling past it through the night shift.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consulting your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst the Equities Club Pty Ltd (“Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 625,000 ELK shares at the time of publishing this article. Equities Club has been engaged by ELK at the time of writing.

Confidentiality notice

The information contained in and accompanying this communication is strictly confidential and intended solely for the use of the intended recipient/s. The copyright in this communication belongs to Equities Club. If you are not the intended recipient of this communication please delete and destroy all copies immediately.

Equities Club Ltd (CAR No. 001308139) is a corporate authorised representative of ShareX Pty Ltd, Australian Financial Services License (AFSL) No 519872.

It’s the NFL's biggest regular season crowd in nearly 17 years, and sent us digging for NFL deals that would make an ASX investor put the beer down.

We found one, and it’s the most anyone has ever paid for an NFL team.

Paul Allen co-founded Microsoft with Bill Gates in 1975, left with his shares after a cancer diagnosis in 1983, and spent the next 35 years buying the things he loved: Jimi Hendrix’s guitars, yachts, old computers, and in 1997, the Seattle Seahawks.

He paid roughly US$194 million for the team.

Allen died in 2018 and his sister Jody ran the team for the next eight years. She won a Super Bowl with the team in February and put it on the market two weeks later.

Silicon Valley investor Vinod Khosla paid US$9.612 billion for it, nearly 50 times what Allen paid. The best part, Allen’s will said every dollar of the sale had to go to charity. Good man.

No 50-baggers on the ASX this week, but we did see funds raised for a small-cap thats now six-bagged since July, a board reshuffle, and one metal that keeps drawing our attention as we hunt for a small-cap with it.

This is what caught our eye in our world this week:

• AI1 hands the wheel to a chip industry veteran

• Copper hits a record while the mines go backwards

• EVG finds the mineral the old miners walked past

• Another drone contract signed for KTK

• Trump puts US$5,000 a head on a rank outsider

• The broker’s 1c pick is a six-bagger

• Saudi oil is running out of exits

• Will the AI trade get spooked tomorrow?

AI1 Hands the Wheel to Chip Industry Veteran

Adisyn (ASX: AI1) moved chairman Kevin Crofton into the top job on Monday after founder Arye Kohavi stepped back from managing director to the board.

The company’s reasoning is sound. It wants a chief executive who has walked into TSMC or Intel and sold them something before, and Crofton will run it until it finds one.

A founder stepping aside will look like a warning sign to some. Our read is Kohavi finished the job he came to do, and selling the graphene into a chip factory is a different job for a different person.

Plus Crofton has spent 30 years selling to the people he’s about to pitch. The fab bosses at TSMC and Intel used to buy their machines from him, and he’s on first-name terms with most of the industry.

Back in April he told us what the big chipmakers say when he asks what graphene grown on a chip below 500°C would be worth to them.

“Many of these companies just say, well, it’s worth more than my company.”

That’s a pretty damn big market.

Graphene is carbon one atom thick, it carries electricity better than the copper wire inside every chip, and Adisyn is the first to grow it at a temperature a chip survives.

Kohavi keeps his board seat and stays at the bench until January 9 to hand the recipe over.

We added AI1 in April at 6.8c. Next Monday it joins the All Ords, the index of the 500 biggest companies on the ASX, and the ASX All Technology index alongside it, which puts a company that grows graphene in a lab in Israel in front of every index fund in the country.

Kohavi grew the graphene, and Crofton’s job now is to sell it.

Copper Hits Record While Mines Go Backwards

The UN put out a paper on Tuesday that says a big data centre takes two to five years to build and connect to the grid. The power lines to feed it take more than ten.

Oracle switched on 850 megawatts of new data centre capacity in the three months to August (its cloud revenue went up 121%), and Microsoft reportedly plans to go from 12 gigawatts of data centres to 38 by 2032.

The wiring inside those sheds and the substations feeding them is copper, and the mines digging it are going backwards. Global mine output fell 1.1% in the first half of the year, and Chile, the biggest producer on earth, fell 6.6%.

Copper set a record four days running and touched US$14,875 a tonne on Thursday, then fell 3% inside the day after Reuters reported the White House had put its copper tariff on ice.

The world keeps its spare copper in exchange warehouses in London and Shanghai, and both are emptying. London’s pile is down 40% since May and Shanghai’s is down 85% since March. With the spare running out, every mine hiccup goes into the copper price.

Part of the run was traders shipping metal into the US ahead of the tariff, and Thursday was some of it coming back out.

The tech giants are building data centres a lot faster than anyone is building power lines or copper mines, and nobody has found a big deposit in 20 years.

We’re bullish copper, and we’re still looking for the right copper junior to add to the portfolio.

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EVG Maps Patch the Old Miners Skipped

Evion Group (ASX: EVG) put out its first field result from Carp this week, and it came off a patch of ground miners in the 60s spent 13 years digging around.

Carp is an old fluorspar mine just over 100km out of Las Vegas. Four shallow pits produced 44,900 tonnes between 1958 and 1971 before cheap Chinese imports shut it.

Fluorspar goes into steelmaking and the acid behind chips and batteries, and the US has barely mined any since 1990, which is now an issue. EVG optioned the mine in May and staked the ground around it.

Last month EVG sent a crew over the ground, and they came back with barite across a patch 200 metres wide, 300 metres from the best of the old pits.

Back in the 60s the mine sold everything to Kaiser Steel, which tipped fluorspar into molten steel to pull the impurities out. Barite is a heavy white mineral that doesn’t go in a furnace, so the miners left the patch alone (if you sold by the tonne to a steel mill, barite was basically dirt).

Every pit they did dig had barite sitting next to the fluorspar, and the South Pit, which produced the most, has the most barite.

Ten rock chips from the patch are at the lab, with results due in the coming weeks, then a drone survey by the end of October to pick the drill targets.

We like the idea and we own the stock. A good surface number has fooled us before, so the drill hole is the one we're waiting on. Every pit at Carp had barite beside the fluorspar, and EVG just found it on ground nobody has touched.

At 1.8 cents EVG is a $16 million company with about $5 million in cash, and most of the rest is the permitted Maniry graphite mine in Madagascar with the German buyer signed last month. Carp is close to free at 1.8 cents.

Fifty years ago the team who mined Carp looked at the patch and saw the wrong mineral. EVG looked and saw the right one sitting next to it.

KTK Gets a New Customer Through the Door

An Israeli drone maker run by former Israeli Air Force people handed KTEK Aerosystems (ASX: KTK) a contract this week to design and build two prototype airframes for its SCOOPER 25.

The SCOOPER 25 is a 25kg electric drone built around a wing that gets it off the ground in a few metres and keeps it in the air for hours without making much noise.

Vestal Technology, the company behind it, is pitching it at special forces and surveillance work.

Small money to start, and small money deals is how KTK’s business has grown over the years. A drone maker hands over a prototype job, and if the airframes fly the way the drawings say, the next conversation is about building them by the hundred.

The first prototype is due in about five months, so the 12 to 18 month question is whether Vestal becomes the next Elbit or UVision for KTK.

Meanwhile the deliveries the war stopped are due to restart this month.

KTK dropped to 17.5c this week, against 20c when it listed in May. With shipments about to move again and a new customer signed, below IPO price is a big opportunity in our eyes.

Trump Puts $5k a Head on Rank Outsider

Donald Trump stood in front of 20,000 people in Texas this week and had them raise their right hands and pledge allegiance to “the greatest president in the history of the United States, that loves us so much he can’t even breathe.”

He then promised every adult American US$5,000 if the Republicans hold both houses of Congress at the midterms in November.

Beats a desperate pollie handing you a democracy sausage, we guess.

There are about 245 million adult Americans so call this new stimulus or bribe (depending on your colours) US$1.2 trillion on top of the US$7 trillion Washington already spends a year.

During the early days of Covid, Washington sent everyone US$1,200 and gold hit a record US$2,070 four months later.

While Trump was promising to borrow, Xi was buying. China’s central bank added 20 tonnes of gold in August, its biggest month since 2023 and the 22nd month in a row.

The US already pays more to borrow than it has in decades with its 30-year bond at 5.3%. Another trillion-dollar promise pushes the bill higher again, and a government borrowing money to hand out to voters is reason #1 people buy gold.

The Fed will likely soon lift rates to head off inflation. Higher rates push gold down for a few weeks but a trillion dollars sprayed into the economy pushes prices up for years (and gold with it).

Mind you, the bookies have a Republican sweep as a rank outsider, so the US$5,000 may never get further than Trump on stage.

Gold sat around US$4,370 this week. The record is US$5,589 in January and the midterms are 51 days away.

Whoever wins, we’ll hang onto our gold stocks.

VR8 Doubles Again

In July one of the brokers in our Broker Black Book handed us Vanadium Resources (ASX: VR8) at 1c. We called it the most left-field pick of the dozen and said we love left-field.

Last Sunday we wrote it up after it ran 80% in a day on the site for its vanadium plant in South Africa. This week it doubled again, 2.7c to 5.9c, a six-bagger in two months.

It came out of a halt on Friday with A$1 million raised at 3.2c to fund a US roadshow and the scoping study on the plant, due by the end of the month. It closed the day at 5.9c, so whoever put money into the placement is up 84% before their shares are even issued.

Another Door Shut on Gulf Oil

Before the Iran war a fifth of the world’s oil left the Gulf through the Strait of Hormuz. It closed in March, so Saudi Arabia has been pumping about five million barrels a day across the country by pipeline to the Red Sea and shipping it out the bottom.

On Thursday, drones launched from Iraq hit the pipeline and the Saudis shut it. Then on Friday the Houthis took Perim Island, which sits right in the mouth of the Red Sea and has shipping lanes about 5km from shore.

With the pipeline down, Saudi oil has no way west. Once it’s pumping again, the Houthis hold the bottom exit, so the tankers go the long way north through Egypt and Asia waits weeks longer for its oil.

Most of the petrol Australia uses is refined in Singapore, Korea and Japan from Gulf crude, so the longer route has a direct effect on our servos.

Brent touched US$110 on Friday and closed near US$105. Nine ships got through Hormuz on Thursday just gone, compared to 130 a day before the war.

Tomorrow, the Gulf states sit down with Iran in Oman to talk about Hormuz, the first time the two sides have been in a room since the strait shut. A lot is riding on how the chat goes.

We said in March we weren’t going to pretend we know how it all ends, and we still won’t. What we do know is every drill rig and mine site we cover runs on diesel, and oil at US$105 flows into the inflation numbers that have most expecting the RBA to lift rates in November. Higher rates make every capital raise harder.

Fill the car up ASAP.

As We Hit Send: AI Boss Says Slow Down

Sometimes markets go looking for a reason to get spooked, and the head of Anthropic (the company behind AI behemoth Claude) may have handed them one early this morning.

As we were about to hit send we were sent a blog post from Dario Amodei arguing that AI is moving too fast and the AI labs need outside inspectors sitting inside them to slow it down.

After publishing, both Elon Musk and OpenAI chief Sam Altman (behind ChatGPT) agreed with him publicly, signalling an intent to join him in slowing the rate of development.

The AI trade has done a lot of heavy lifting on Wall Street for the best part of three years, to the point plenty have been calling it a bubble, and a leading figure giving reason for pause could shake some confidence.

Earlier this year about 1,200 OpenAI agents broke out of the test they were meant to stay in and started attacking websites well outside the job they’d been given. Amodei’s worry is a smarter swarm hijacks the internet inside a year.

Altman also ruled out taking OpenAI public this year, telling Fortune it would be “ill-advised” while the safety questions are open. Most had it down as the biggest IPO in history.

Slowing the models changes none of the growing need for data centres and the commodities (like the copper we wrote about above) to feed the buildout, but there’ll be plenty of analysts stewing over Amodei’s blog post today.

We’ll find out Monday how many people read past the headline.

The Week Ahead

You’re probably sick of reading about Hormuz. It’s been shut since March and most people have tuned out beyond an annoyed glance as they pass the petrol station.

But a fifth of the world’s oil used to come through it, and the Oman meeting tomorrow is the first real chance in six months of getting some of it moving again. Iran have said it stays shut until Washington meets its terms, so our guess is Monday changes little and oil stays above US$100 for a while yet.

Later in the week, the Fed decides on rates Thursday morning our time. Most of the market expects a hike, so the only surprise on offer is a hold, and we’ve hoped for one at every meeting since March (look how that’s gone).

We’re still hunting for a copper junior, and with copper at US$14,000 a tonne there are plenty to look at. We’re after the one nobody has noticed yet, and we’ll keep looking until we find it.

MRD’s Selectro results are due any day and POW’s crew heads out to Malbec in the next week or two. We’ll be checking every morning waiting for the updates.

Till next week.

General advice warning

The contents of this document are intended to provide general securities advice only and have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in this document, consult your own investment advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs. If applicable, you should obtain the Product Disclosure Statement relating to the relevant financial product mentioned in this document (which contains full details of the terms and conditions of the relevant financial product) and consider it before making any decision about whether to acquire the financial product. Whilst Equities Club Pty Ltd (”Equities Club”) believes information contained in this document is based on information which is believed to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Equities Club or any officer, agent or employee of Equities Club or any related company.

Neither Equities Club, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice.

Disclosure

The directors, authorised representatives, employees and associated persons of Equities Club may have an interest in the financial products discussed in this document and they may earn brokerage, commissions, fees and advantages, pecuniary or otherwise, in connection with the making of a recommendation or dealing by a client in such financial products. Equities Club owns 900,000 AI1 performannce rights, 4,500,000 shares in EVG, 500,000 KTK shares, 625,000 POW shares, shares 2,083,333 MRD performance rights at the time of publishing this article. Equities Club has been engaged by POW, AI1, EVG, KTK and MRD at the time of writing.

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