Small caps are back. The week saw a familiar S&P 500 and Nasdaq hit fresh all-time highs, while a long-lost little brother, Wall Street’s small-cap benchmark the Russell 2000, surged to a record close, marking its first peak since a bull run to November 2021.
The rally signals renewed investor confidence in small caps. The sector is riding a wave of optimism and bull run data, which historically delivers robust returns when the United States Federal Reserve cuts rates.
Reduced policy rates are particularly beneficial for smaller, rate-sensitive firms, which rely heavily on debt financing. As a result, the gap is narrowing between the underperforming small caps and the blue chips. After years of divergence, the punters’ market is risk on.
Australian resources faced a tough week, whether they knew it or not. For the second time in 18 months, a major suitor abandoned a takeover bid for Santos, one of Australia’s leading oil and gas companies. Santos saw billions wiped off its market valuation after a $31 billion takeover deal failed to form with Abu Dhabi National Oil. The news sent shockwaves through the sector, underscoring its vulnerability to global sentiment shifts.
This type of foreign investment in Australian resources continues to dwindle, as even major local players such as BHP and Rio Tinto remain reluctant to commit to new projects in Australia. The caution is understandable, as policymakers push anti-resource policies, despite the sector driving nearly all of Australia’s real GDP growth in the 21st century.
Outside of gold and lithium, the “lucky country” needs to be on notice. Australia is nowhere near a manufacturing powerhouse, and if we keep tightening the noose on agriculture and resources, industry might run out of air.
The Bulls N’ Bears Runner of the Week was claimed by a local fintech breakthrough, which secured a landmark deal with one of the world’s most notorious US trading platforms. The agreement, rumoured to involve advanced blockchain technology, positions the firm at the forefront of global trading practices as it joins a list of countless Aussie fintech successes coming out of the small-cap woodwork.
STAKK LIMITED (ASX: SKK)
Up 683% (0.6c – 4.7c)
Bulls N’ Bears’ Runner of the Week is fintech flyer Stakk Limited. The company sealed a two-year, extendable deal with US powerhouse Robinhood to command its new banking service.
Stakk says its image capture, authentication and transaction processing tech is set to drive Robinhood’s push into full-service banking, offering checking and savings accounts with luxury perks for gold subscribers.
Robinhood is a $118 billion market capped juggernaut, which made its name dragging millennials into stocks, crypto and ETFs.
The deal is a big fish, extendable and material, but the dollars hinge on Robinhood’s banking gamble paying off. There’s no crystal ball on revenue yet, but the skies are blue.
Last month, Stakk also scored a $3.05 million, three-year contract with Sharetec Systems, adding 147 US banks and credit unions to its roster. That pushed its annual recurring revenue past $3 million. It’s now servicing 202 banks, eight neo-banks and two fintech partners.
The market’s getting that old fintech tingle again. Stakk’s share price blasted 683 per cent to 4.7 cents per share on Friday from a 0.6c close last week, with more than $20 million in shares traded.
If Robinhood Banking takes off, Stakk could be the fintech flavour of the year. But it’s tethered to an untested venture offering high stakes and high rewards backed by some handy recurring revenues. It looks like Stakk is swinging big in a small caps market that is unlikely to miss.
CARNEGIE CLEAN ENERGY (ASX: CCE)
Up 217% (6c – 19c)
Carnegie Clean Energy had no news in the market this week, predictably drawing a query from the ASX’s compliance team.
It recently completed a share purchase plan for existing shareholders, but dismissed the ASX’s inquiries, attributing the company’s share price surge to its robust promotional efforts and a new US OTC market listing.
Carnegie has been actively showcasing its CETO fully submerged wave energy technology across the US and is gaining market momentum.
The company’s share price began the week modestly but soared as investors noticed its strong performance on the OTC exchange. Carnegie’s stock rose as much as 217 per cent from last week’s 6c/share close to a high of 19c this week, with more than $3 million in shares traded.
The company owns and develops the proprietary CETO wave energy technology, which captures kinetic energy from ocean swells and converts it into grid-ready power.
Carnegie is also a key player in the €4 million ($7.1 million) COIN project, funded by the European Union’s Horizon Europe program. It’s joined nine European partners, including its Spanish arm, to develop control systems for future wave energy farms.
Wave energy, essentially harnessed wind energy, is logically generated by submerged devices rather than erecting massive iron windmills that mar stunning coastal landscapes.
LORD RESOURCES LIMITED (ASX: LRD)
Up 150% (6c – 15c)
This week’s final podium placer is Lord Resources Limited, which shot out of a cannon on Wednesday, after stunning copper visuals at its Ilgarari project in Western Australia had the company calling for an extended drilling program at its flagship project.
Lord observed visual copper mineralisation across multiple holes in its ongoing 11-hole drilling program. It is still to complete four diamond tails.
The program, which Lord started in early August, is following up on previous work that identified multiple high-priority copper targets along the Ilgarari fault.
Notably, a hole with 20.2 metres of visible copper mineralisation is a significant step‐out, 60m down dip and 100m west along strike of historic copper intervals, supporting the company’s interpretation of a supergene‐enriched zone above sulphide mineralisation.
Lord has sent core samples off to the lab and expects to receive assays in October.
The share price shot up on news of the copper visuals, rising 150 per cent to a high of 15c/share from a close of 6c last week on nearly $7 million in paper changing hands.
Ilgarari lies 130 kilometres north of Sandfire Resources’ DeGrussa mine, once Australia’s top copper-gold operation. DeGrussa turned Sandfire into a mid-tier producer before its ore dwindled. Lord’s visuals hint at a similar prize.
If assays match the visuals, Lord could uncover a copper beast. Its proximity to DeGrussa adds to the allure, but results are weeks away and drilling is not done. Let’s hope they can turn up more visuals before the rigs roll out.
KULA GOLD LIMITED (ASX: KGD)
Up 145% (1.1c – 2.7c)
Bulls N’ Bears loves a late Runner, and this week, junior gold explorer Kula Gold sprinted to the finish line after striking visible gold in its first diamond drill hole at the Mt Palmer gold project in WA’s Southern Cross goldfields.
The news sparked a buzz, with assays now keenly awaited to confirm the potential of this historic high-grader.
The company says its 54m diamond hole struck quartz reefs from 30.1m, with visible gold at 31.4m, 35.4m, 35.85m, 36.1m and 36.45m.
The diamond program is targeting shallow prospects, such as Epis and New Lode, to build on earlier drilling hits, including 18m running 4.4 grams per tonne (g/t) gold, with a bonanza 2m section grading 31.3g/t, and a further 6m hit running a massive 36g/t.
The visuals look likely to surpass those hits, echoing Mt Palmer’s gold-rich past. In 1934 and 1944, Mt Palmer churned out 150,000 ounces of gold at a staggering 15.9g/t before WWII shut it down.
Since then, only seven diamond holes have probed below old workings, leaving Kula with plenty of untapped potential. Recent high-grade hits and structural work by specialist structural geology consultants Model Earth point to undiscovered orebodies in this gold-soaked belt.
Sitting north of Nevoria’s 600,000 ounces and east of Marvel Loch’s 3 million ounces, Mt Palmer boasts prime real estate. It is also just 15km from Marvel Loch’s processing plant and 90km from the Edna May gold mine, offering nearby infrastructure to support low-cost development for a project on an existing mining lease.
Visible gold this abundant doesn’t come around every day and Kula’s share price was an in the box score, up 145 per cent to a high of 2.7c/share on Friday from last week’s 1.1c close.
Beyond the spectacular grades, Kula says the geological stars are starting to align. Drilling is tapping into high-grade mineralisation at New Lode beneath historic workings, where rich gold appears to be concentrated in fold closures. These can be classic structural traps for juicy mineralisation.
Kula is in a gold-soaked belt with infrastructure on tap. If assays confirm the visuals, Mt Palmer could be a high-grade revival story for a region hungry for more ore. For now, it’s a sparkling tease in a red-hot gold market.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
