Small-cap Gold Stocks on the ASX: Complete Guide

Interested in Australian small-cap gold stocks? INN has put together a guide to help you determine which investment may be right for you.

As gold continues to prove itself as a strong commodity, investors should consider extending their portfolios to the precious metals space.

In particular, for market participants interested in high risk, high reward investing, they may want to turn their attention to small-cap gold stocks on the ASX.

Read on for a breakdown of the top small cap Australian stocks, as well as how and why to invest in these companies.

Small-cap gold stocks on the ASX: Why invest in small-cap stocks?

What is a gold stock?

Like all publicly listed stocks, gold companies issue shares that are available for investors to trade. When you purchase shares of a gold stock, you are essentially purchasing a stake in the company, making financial returns or losses from its profits.

There are two main ways that an investor can purchase stocks from gold miners. The first way is when market participants purchase through a major mining company. The other way of trading on the stock market is by investing in a gold mining stock through a junior miner.

Although no gold stock investing is 100 percent foolproof, backing a successful mining company in the precious metals space can alleviate some of the stress of a down stock market when you keep in mind that if a company’s share price goes down, it becomes more affordable to purchase and investors can more than likely anticipate that it will rise again and turn a profit.

While gold stocks are affected by some of the same factors that shape and shift the price of the precious metal, they keep some distance from a direct correlation because it is possible for a gold miner and its stocks to be doing well even in a down market.

Small-cap gold stocks

As previously mentioned, small-cap stocks are the second way to invest in a gold stock. A small-cap stock comes from a company with a small market capitalization, also known as a junior miner. Junior mining companies raise funds from investors in order to explore gold assets. Small-cap companies generally need their larger counterparts to either help them develop gold discoveries or to eventually purchase their assets in order to turn a profit.

It is important to understand that junior mining stocks are inherently risky. Companies frequently fail because of the risks involved in exploration and development. Discovering viable deposits is incredibly difficult, rare and capital intensive. As a result, stock values can shift drastically when juniors report disappointing drill results or poor returns.

Despite this, many investors are attracted to junior mining stocks because, as resource specialist Peter Krauth wrote, “(A)ll it takes is just one 10-bagger to make up for all the dogs in the pound.”

Of course, juniors will still have to remain disciplined when it comes to cash flow and capital allocation. Volatility in commodities prices is still going to be an issue, even with recent rallies — and the climate of global politics has to be taken into consideration with every exploration and investment decision.

While a large majority of small cap gold companies are coming from Canada, there are several burgeoning junior companies within Australia.

Brock Sailer, a partner at Sprott Global Partners, believes that there is an intriguing case to be made for looking at ASX-listed stocks.

“(There are) a bunch of (ASX-listed) mining companies doing exactly the same thing as what the Canadians are doing. So you’ve got to be careful when you’re investing in a Canadian stock — are you getting the best value?” he said to the Investing News Network (INN).

As his second point, Salier noted that the ASX and even the LSE are home to companies that focus on commodities and geographies that are less common on the TSX and TSXV. For example, he said, London-listed companies tend to be more comfortable with Africa, while companies on the ASX “have taken to (the Tesla (NASDAQ:TSLA) revolution) with more vigor than anyone on the TSX or in London.”

Small-cap gold stocks on the ASX: How to invest in the right one

To identify a successful small-cap gold stock on the ASX, investors should use as much information as possible to make their choices. Here are a few tips on how to spot winners:

  • Be aware of political risk: Krauth notes that it’s worth taking the time to familiarize yourself with the countries in which junior miners operate. “It’s simple,” he says. “The last thing you want is for some kleptocrat to wait until tens of millions have been spent to discover a massive gold deposit, only to turn around and revoke a key permit or expropriate the land.” Metrics like the investment attractiveness index — on which Western Australia currently ranks second in the world — can provide an overview of which countries are more receptive to mining projects, but timely information is key, too. Wars, strikes and election cycles are particularly noteworthy and should always be looked at when considering juniors.
  • Experienced management is crucial: Because there is little room for error, investors should look to juniors whose management has a solid track record, including significant exploration experience. Strong management tops the list for Brent Cook of Exploration Insights. “Of the roughly 3,000 junior exploration companies combing Earth chasing down anomalies,” he wrote, “maybe half can be thrown out because of incompetent or unfocused management: management is key in the junior sector — get to know them.” News about staff changes like resignations, new hires and company restructurings may seem small at first, but team updates are a crucial point to be aware of when choosing juniors.
  • Keep up with the news: The value of a junior mining company is heavily affected by business activities like the development of new partnerships or acquisitions by mining majors. Keeping up with updates is important here — juniors are often high-risk investments that rely on strong partners to provide extra resources and expertise. Pay special attention to news about partnerships, management changes, license acquisitions and disputes.
  • Read studies and reports: Understanding technical reports and studies is crucial to understanding the progress of junior mining companies. Many juniors rely on successful exploration to turn a profit or bring in major partners. Feasibility studies are especially helpful to look out for — they provide information that can help determine the likelihood of a project’s success, its potential challenges and what the payoff might be. Many of these reports are technical, so it’s important to appreciate the details and understand topics like mineral grading, licensing, reserve estimates and test types.
  • Use purchasing criteria: Speculating on junior mining stocks is common, but can be heavily influenced by personal biases and impulse choices. It helps to bring a more rigid, objective approach to picking junior mining stocks. Rick Rule of Sprott US Holdings suggests buying a stock for a specific reason, and selling that stock if the reason disappears. Thinking like this allows decisions to be made more quickly and with more clarity.

Small-cap gold stocks on the ASX: 5 best small-cap gold stocks on the ASX

Below we’ve outlined the five ASX-listed gold stocks that have seen the biggest gains year-to-date. Data for this article was gathered using TradingView’s stock screener on December 2, 2019, and companies with market caps under AU$50 million were considered.

1. Mandrake Resources (ASX:MAN)

Year-to-date gain: 433.33 percent; current share price: AU$0.02

Mandrake focuses on the resource exploration sector and through its subsidiary Focus Exploration owns the Berinka project, which is located within the Pine Creek Orogen of the Northern Territory.

To date, the best intercepts that the miner has encountered through drill programs is 4 meters at 6.6 grams per tonne gold from 32 meters, 6 meters at 3.8 grams per tonne gold from 18 meters and 5 meters at 2.6 grams per tonne gold from 30 meters.

Additionally, there are multiple further gold targets identified through surface geochemistry and rock chip sampling, all of which are in close proximity to the large Union Reef mill, which is owned and operated by Kirkland Lake Gold (ASX:KLA,TSX:KL,NASDAQ:KL) and is slated to re-start operations soon.

2. Kalamazoo Resources (ASX:KZR,OTC Pink:KAMRF)

Year-to-date gain: 218.18 percent; current share price: AU$0.28

Kalamazoo is a gold and base metals explorer, but its primary focus is on identifying commercial mineral deposits to explore at its Castlemaine gold project in Victoria. Additionally, the miner holds two gold-base metals projects in Western Australia.

The company is relatively new to the ASX, as it only began trading on the exchange at the beginning of 2017. Since then, the miner has been exploring and developing not only the Castlemaine gold project, but the Snake Well base metals project and the Cork Tree copper project.

In the last few months, Kalamazoo has raised AU$1.2 million in order to fund its Victorian gold projects and officially applied for an exploration licence to further increase its tenure at its newly acquired South Muckleford gold project.

The South Muckleford gold project is located in the Maldon Goldfield of Victoria and boasts historical gold production of 1,975,000 ounces of primary gold, as well as 317,000 ounces of alluvial yellow metal. The asset is also conveniently located approximately 10 kilometres from the miner’s Castlemaine gold project.

3. Great Southern Mining (ASX:GSN)

Year-to-date gain: 171.43 percent; current share price: AU$0.08

Great Southern is an exploration company that is working towards becoming a leader within the gold space in Australia. The miner has significant land holdings in the world-renowned gold districts of Laverton in Western Australia and the Mount Carlton region of North Queensland.

The miner’s main focus is on creating and capturing shareholder wealth through rich exploration programs that are low cost. Additionally, the company is working on strategic project acquisitions to complement and build its existing portfolio of quality assets.

Within the North Queensland region, Great South operates the Johnnycake project and the Edinburgh Park project, both of which are in the early exploration process. In Western Australian, the company operates the Mountt Lucky project and Cox’s Find gold project. Drilling at Mount Lucky revealed a resource of 1.1 million tonnes at 1.7 grams per tonne gold for 59,000 ounces. When the the resource estimate was released, it was estimated above a 1 gram per tonne gold cut-off.

4. E2 Metals (ASX:E2M)

Year-to-date gain: 150 percent; current share price: AU$0.20

E2 Metals is relatively new to the mining scene, as it only became listed on the ASX in 2017. However, the company has set its focus on making new discoveries in the world class Santa Cruz gold and silver province in Southern Argentina. The miner plans to use its innovative geoscience to lead them and investors to the next major discovery.

The mining friendly state of Santa Cruz is one of the most prolific gold provinces in South America, and E2 Metals owns and operates a unique mix of highly prospective but underexplored ground within the region.

The company’s current assets include Conserrat, where in excess of 11 million gold equivalent ounces have been mined in the past; Sierra Morena, which holds several kilometres of untested gold and silver veins; Corona, 30 kilometres south of the Cerro Negro vein district with in excess of 9 million gold equivalent ounces of total endowment; and Angostura, which has multiple coherent geophysical targets.

5. Black Cat Syndicate (ASX:BC8)

Year-to-date gain: 143.33 percent; current share price: AU$0.37

Black Cat also has its focus in the Western Australia region as it works to advance the exploration and development of the high grade Bulong gold field.

The company has often commented on its unique name with the gold space, stating, “Black Cat Syndicate is a play on good luck — for our investors and us. We have coupled this with a dose of respect for the early financiers that boldly made the Australian gold industry what it is today.”

Black Cat wholly owns the Bulong gold field, situated 25 kilometres east of Kalgoorlie by sealed road. Today, there are numerous high grade open cut and underground targets on mining leases with drill-ready targets, and Black Cat’s strategy to rapidly progress developments is by completing infill and extensional drilling at numerous mineralised corridors.

Assets at Bulong include the Queen Margaret corridor, Anomaly 38, Trump corridor and Myhree-boundary corridor.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Nicole Rashotte, currently hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

According to Geoscience Australia, one of the country's first mines was a silver-lead mine near Adelaide. Since then, the entire continent has been combed over with a fine-toothed comb, with deposits identified in every state and territory and active mines in every jurisdiction but one (Victoria).

Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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