Junior resource plays are joining the acquisition bandwagon

It’s not just cashed-up majors who are looking to make acquisitions, ASX juniors are also getting in on the game to pick up choice projects.

Cashed-up ASX juniors are looking to make acquisitions. Pic: Getty Images

• Resource juniors are joining majors in the push to make acquisitions

• As of the September 2024 quarter, juniors had an average cash balance of ~$9.5m

• Market uncertainty could make acquiring projects more affordable

Cashed-up majors looking to snap up resource juniors or particularly promising projects are certainly all over the news with Northern Star Resources' (ASX:NST) acquisition bid for De Grey Mining (ASX:DEG)  being a notable recent example.

But there are also more than a few juniors looking to lighten their bulging pockets with a spot of acquisition activity.

Some recent examples include TG Metals (ASX:TG6)  acquiring the Van Uden gold project in WA and Impact Minerals (ASX:IPT)  picking up ground adjacent to its existing operations to just about surround the legendary Broken Hill lead-zinc-silver mine in NSW.

However, making acquisitions does require funds (or shares to be issued) and BDO’s Explorer Quarterly Cash Update for the September 2024 quarter – which is admittedly a little outdated now that December 2024 quarterlies have been out for more than a month – has noted that junior resource companies had an average cash balance of about $9.5m, a two-year low.

The report also found that average exploration expenditure had fallen from $1.07m in the previous quarter to $1.04m, which is also 11% below the two-year average.

This suggests that explorers remain cautious and are balancing exploration activities with cash preservation strategies – likely due to rising economic uncertainty and shifts in market conditions.

However, the very conditions that force caution for exploration expenditure are also the ones that make attractive projects that much more affordable for those with cash to burn.

Here then are some companies that have decided that now’s the time to participate in acquisition activity – counter cyclical or not.

GWR Group (ASX:GWR)

With some $37.3m sitting in the bank as of the end of December 2024, GWR has both the cash balance and interest in making an acquisition.

While the company has flagged for some time now that it was keen on making moves that will complement its Prospect Ridge project, a deal might now be in the works with GWR noting in a February 17 presentation that it had submitted a non-binding indicative offer for a significant transaction in Western Australia.

Due diligence was last reported to be underway and while details are available as yet, it did note that its commodity focus is on critical minerals, particularly those applicable to advanced industrial applications.

GWR’s Prospect Ridge magnesite project in northwest Tasmania is held in joint venture with Dynamic Metals (ASX:DYM), which has a 30% interest in the project.

The advanced asset has seen a substantial amount of work including diamond drilling, metallurgical test work, hydrological test work, resource modelling and feasibility studies.

It covers the Arthur River and Lyons River deposits which collectively host Australia’s third largest magnesite inventory – an inferred resource of 25.12Mt grading 42.4% magnesium oxide, 4.8% silicon dioxide, 1.4% iron oxide and 2.6% calcium oxide.

Magnesium metal and its alloys are used extensively in automotive and aerospace industries in light weight bodies, engines, and other parts indispensable in modern vehicles – including electric vehicles.

Assays are currently pending for Phase 2 diamond drilling that was completed in June 2024 to provide additional metallurgical samples, assist with resource updates and domaining of mineralisation types.

The company is also investigating the potential to carry out a Phase 3 drill program of up to 21 holes totalling 3150m at Arthur River to assist in upgrading resource confidence.

An assessment of the Lyons River deposit is also underway.

Norfolk Metals (ASX:NFL)

With $2.66m in cash as at the end of December, NFL has continued to review multiple assets and opportunities for investment or acquisition.

In its December 2024 quarterly report, the company said these covered several commodities including gold, copper, silver, uranium and other base metals.

This continued its plans to consider the acquisition of undervalued exploration projects in proven regions that complement its existing projects while maintaining a favourable company structure and cash reserves.

NFL is currently reviewing historical drill core, maiden program drill chips, seismic and gravity data from its Orroroo uranium project in South Australia to support the next phase of exploration.

Additional structural reinterpretation of the gravity data and phreatic uranium flow model is also being carried out to generate new alternate targets for future drill planning.

The company is also reviewing and rationalising land holdings at its Roger River project in Tasmania prior to carrying out the next phase of exploration.

At Stockhead, we tell it like it is. While GWR Group, Norfolk Metals, TG Metals and Impact Minerals are Stockhead advertisers, they did not sponsor this article.

Originally published as Junior resource plays are joining the acquisition bandwagon