MoneyTalks: Why Perth investment firm GTT Ventures likes gold and rare earths

It’s a tough market right now for commodities, with juniors and majors alike taking a hit from the flight to US tech and fears over global economic growth.

Perth-based investment firm backs gold and rare earths despite a tough market right now for commodities. Pic: Getty

MoneyTalks is Stockhead’s drill down into what stocks investors are looking at right now. We’ll tap our list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from GTT Ventures co-founder and executive director Rocco Tassone.

It’s a tough market right now for commodities, with juniors and majors alike taking a hit from the flight to US tech and fears over global economic growth.

That means shrewd decisions are important for investors in higher-risk areas like junior resources stocks.

With not every post a winner right now, it helps to pick up on the themes that stand out in a crowded and risk-off market.

That’s why Rocco Tassone, co-founder and executive director of Perth investment firm and corporare advisors GTT Ventures, likes a few sections of the fragmented commodity market right now.

“Two direct commodity themes that are particularly compelling right now are gold (Western Australian especially) and rare earth elements, for obvious reasons, both are supported by strong macroeconomic and geopolitical tailwinds,” Tassone said, noting specifically US rare earths projects would benefit in the current political environment.

“Still associated with commodities, I think its worth considering the old saying “during a gold rush sell shovels”, and for this reason the mining services sector is also interesting.

“(It’s also) certainly hard to ignore the thermal management sector as a critical supply to data centres.”

Golden days

For those key picks – gold and rare earths – offer a selective angle from which investors can approach a spotty commodity space.

We’re not in the boom times, but some corners of the market are certainly shining.

“In today’s macroeconomic and geopolitical environment, it’s less about chasing broad-based commodity exposure and more about identifying sectors with asymmetric upside potential and structural tailwinds,” Tassone said.

“Focus on commodities linked to prevailing macro trends and long-term policy commitments, and recognise that while some commodities remain cyclical, others – like those linked to decarbonisation, defence, or digitalisation – are benefiting from secular demand growth.

 “For example, gold offers macro stability and inflation hedging; rare earths present structural growth driven by national interest and supply chain realignment. This dual exposure captures both defensive and offensive characteristics, which is ideal in today’s complex market environment.”

What do junior stocks need? The ability to raise capital and maintain a strong balance sheet is a critical factor.

That could come from the market, though dilution is, more than comparison, the thief of joy for retail investors.

So companies with a well-stocked bank account or near term production and cashflow opportunities stand out.

“There is no shortage of companies spruiking near-term cashflow, it’s the investor’s job to decipher this and understand how much capital is required (relative to market capitalisation) and what return on capital will be received,” Tassone said.

“Given the junior sector’s constant need for capital, preference should be given to companies that are approaching production, have granted mining leases, and can demonstrate robust economic studies and financial metrics.

“Management capability is equally vital — teams with proven operational track records and experience navigating permitting, financing, and development cycles are far more likely to deliver value and attract institutional support. Additionally, Directors who are prepared to invest their own cash and buy shares in their own company should also be considered a strong signal, ”

It also helps juniors get a better deal if they are looking to JV or bring in a strategic partner. Like a bachelor or bachelorette with a rich inner life, a firm that doesn’t need to rely desperately on a partner will be better able to hold off for the right offer and maximise value.

ASX stocks to watch

With those guard rails in mind, these are some of the stocks GTT and Tassone like the look of right now.

Western Gold Resources (ASX:WGR)

“At just a $12m market capitalisation (WGR) owns 100% of the Gold Duke project in WA with a JORC 2012 MRE of 3.2Mt at 2.1g/t Au for 219,000oz,” Tassone says.

“The investment case for WGR is straight forward: Fully permitted, recent scoping study outlines 61% IRR and was conducted on pit optimisations of A$2800/oz gold for 34,000oz and revenue was assumed on A$3500/oz.

“With the gold price trading at ~A$5200/oz, I would expect significant upside risk to the ounces mined and the $38.1m free cash flow (after costs) outlined in the scoping study on relatively low capex.”

Tassone says there are a number of near term catalysts as well.

They include the execution of a toll milling or ore purchase agreement, grade control drilling, pit re-optimisation and a decision to mine.

Commencement of mining and the completion of Stage 1 at Gold Duke is all expected to occur within 12 months, capitalising on current, near record gold prices.

High-Tech Metals (ASX:HTM)

“HTM is finalising the acquisition for 100% of the Mt Fisher gold project and 51% of the Mt Eureka gold project from Rox Resources (ASX:RXL),” Tassone said.

“The projects host an existing JORC 2012 MRE of 3.52Mt at 1.65g/t Au for 187,000oz of gold, with 88,000oz in the measured and indicated classification.

“The acquisition delivers HTM granted mining leases, a significant landholding of 1150km2 in a premier Western Australian gold province, covering much of the underexplored Mt Fisher greenstone belt.”

HTM is worth less than $10m on market, which Tassone estimates at $25 per resource ounce once the deal is cleared.

“The company has a strong case for a short-term rerate. It has recently announced a free carried Profit Sharing agreement to monetise their ore stockpiles that could deliver strong cash flow to fund future exploration,” he said.

“A 15,000m drilling program is planned to follow up high priority brownfields and greenfields exploration targets including imminent testing of exploration targets that have historic intercepts including:

• 18m at 6.98g/t Au from 69m, with 10m at 10.27g/t Au; and
• 13m at 6.81g/t from 45m.”

SSH Group (ASX:SSH)

“SSH burst on the mining services sector, winning preferred contractor status for mining the Gold Duke project in Wiluna, WA and recently signed a profit sharing agreement over the Mt Fisher gold stockpiles, also in WA,” Tassone said.

“The company is on track for EBITDA of $7m and has delivered eight consecutive quarters of positive cash flow with a strong asset register.

“The company recently completed the acquisition of Total Contract Mining, marking a substantial strategic advancement for SSH and its mining services division, SSH Mining.

“This transaction not only enhances its operational capabilities but also introduced a team of highly skilled professionals with extensive industry expertise and a demonstrated history of success in hard rock mining throughout Western Australia.”

Tassone said SSH had developed a robust presence in WA, where it is seeking to collaborate with junior gold companies to bring small scale assets to production at a time of high gold prices.

Green Critical Minerals (ASX:GCM)

GCM is Tassone’s top pick in the data infrastructure pace.

It is commercialising technology called very high density graphite (VHD) blocks, important material for the cooling of infrastructure in AI data centres.

“(GCM is) emerging as a commercially viable, scalable and high-performance alternative to traditional heat management materials, with a clearly defined and validated path to market – not only replacing these traditional materials, but significantly outperforming them,” Tassone said.

“Targeting commercialisation by end of 2025 in a growing +US$700bn market, VHD graphite is critical for the future with applications in advanced electronics, data centres, AI, nuclear, and defence.”

The pitch is that the tech being pursued by $33m capped GCM can provide system level impact and reduce overheating risks in AI processors, servers, chips and advanced electronics as well as deliver cost savings.

“The company has already collaborated with GreenSquareDC, a leading Australian data centre operator and caught the attention of a leading European thermal management provider,” Tassone said.

“Having been an investor in (titanium technologist) IperionX (ASX:IPX) since September 2020, my personal opinion is I see similarities between the two companies and GCM may be positioned for a similar trajectory should they penetrate the USA market.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

At Stockhead, we tell it like it is. Western Gold Resources and Green Critical Metals are Stockhead advertisers, but they did not sponsor this article.

The interviewee holds positions in WGR, HTM, SSH, GCM and IPX. The Interviewee comments and opinions expressed are his own, they do not and should not constitute financial advice and you should speak to your own financial advisor prior to making any investment commitment.

Originally published as MoneyTalks: Why Perth investment firm GTT Ventures likes gold and rare earths