Gold Merger Creates Giant as Defence, Drilling Heat Up

$50 billion got wiped off the ASX 200 on Friday, the worst day in seven weeks.

While the big end of town got sold off, our small-cap portfolio kept punching. We had a missile defence commander join an advisory board, visible sulphides on a first hole back, drills about to spin up on another project, and a resource expansion in motion.

It was another reminder that even when the big end of town pulls back, the small-cap space can still produce serious opportunity for investors paying attention to where momentum is building.

Gold pushed back over US$4,700/oz, Tabcorp punters watched $500 million walk out the door, and a $10.7 billion merger that creates a new ASX gold heavyweight. Plenty going on.

Let’s get to it.

What caught our eye this week:

• Fund managers think a peace deal could send the ASX back toward record highs
• AI1 lands a top-shelf advisory board appointment and locks in US patent protection
• Exultant Mining set to drill Balerion with high-grade historical hits back in focus
• Mount Ridley adds new targets as it looks to expand Grass Patch
• Fortuna adds more expertise with a titanium specialist
• AZ9 is back drilling in Mongolia and immediately hits visible sulphides at Red Hill
• Tabcorp punters cop it as more than $500 million is wiped overnight
• A new ASX gold heavyweight emerges as consolidation sweeps through the sector

Could Markets Push Back To Record Highs?

One of the more interesting market conversations this week centred on what happens if the US and Iran actually get a permanent peace deal done.

Before the conflict escalated, global markets were already pushing record highs on the back of AI spending and a wall of liquidity flowing back into equities.

Since then, oil spikes and inflation fears have dragged sentiment lower, particularly across more cyclical sectors.

Now a growing number of fund managers think the market simply snaps back if the war risk disappears.

The AFR spoke to several managers who reckon the ASX has trailed overseas markets all year and could quickly return toward record levels on a lasting ceasefire.

The logic is fairly straightforward. Lower oil prices ease inflation pressure, easing inflation helps central banks relax, and once rates stop being the market’s biggest fear, money tends to rotate back into growth and risk assets very quickly.

AI1 Lands Iron Dome Pedigree and Locks In Its US Patent

Adisyn (ASX: AI1) had another big week across both its defence and semiconductor business lines, with the share price following suit up another 42% this week closing at 30c on Friday.

AI1 is now up over 340% since we first added them to our portfolio three weeks ago.

This weeks run in share price was off the back of a high-profile advisory board appointment and locking down foundational US patent protection over its core graphene tech.

Both moves suggest AI1 is shifting from early science work into the commercial phase.

Something that should excite shareholders greatly.

The company appointed retired Israeli Air Defense Colonel Tamir Zimber as the first member of its newly formed advisory board, with Zimber previously responsible for the operational execution of Iron Dome, Arrow, David’s Sling and Patriot systems.

That’s a serious bit of pedigree for a company building graphene-based radar absorption materials for drones and defence applications.

Zimber also currently sits inside Israel Aerospace Industries overseeing major defence programs, which potentially opens doors for AI1 across operational networks and procurement pathways within Israel and broader allied markets.

The advisory board itself looks designed to help bridge the gap between laboratory success and real-world deployment.

At the same time, AI1 announced the USPTO had allowed its core graphene coating patent covering the manufacturing process and the products built from it. In particular the ever growing drone industry.

The patent locks in legal protection around the company’s low-temperature graphene deposition technology as it heads into commercial discussions around semiconductors and defence applications.

Taken together, the two announcements give AI1 stronger credentials in defence circles and proper IP protection just as semiconductor supply chains and drone capability move higher up the priority list globally.

Exultant Nears Drill Start at Balerion

Exultant Mining (ASX: 10X) is just about ready to spin the drill bit at the newly renamed Balerion Prospect. Approvals are through and the 12-hole RC campaign is good to go.

The market still appears to be paying very little attention to what is shaping as one of the company’s biggest near-term catalysts.

The campaign is targeting multiple untested geophysical anomalies pulled from the company’s recent IP, gravity and resistivity surveys across a 900m-long copper-lead-zinc-silver-gold corridor.

Several holes are also targeting down-dip extensions of historical high-grade hits, including 4.4m at 342.7g/t silver, 4% lead and 1.1% copper, alongside another intercept returning 22% zinc and 11.6% lead.

10X is trading at 17.5c with a company valuation of $6.5 million with around $3 million in cash. With a drill program approved, drills about to turn, and proven high-grade historical hits there is obvious potential for a share price rise if similar results can be hit.

The next few weeks could shift the narrative quickly for 10X if Balerion starts delivering on what management thinks is in the ground.

Mount Ridley Keeps Adding to Grass Patch

Mount Ridley Mines (ASX: MRD) keeps building scale around its Grass Patch rare earths, scandium and gallium system near Esperance, with new 3D gravity modelling pointing toward more potential beyond the current resource footprint.

The modelling confirmed a strong relationship between mineralisation and gravity highs, with the company identifying multiple new target zones across two large mineralised corridors that remain open along strike and at depth.

The shallow depth to fresh rock, estimated around 70-80 metres, matters if the resource base continues growing. Shallower mineralisation can materially improve future mining economics through lower strip ratios and simpler development pathways.

MRD continues strengthening its position in the heavy rare earths space, with the company working alongside Lawrence Livermore National Laboratory on metallurgical processing while still trading at roughly one-fifth the valuation of nearby peer Victory Metals (ASX: VTM), leaving plenty of room for the market to reassess the story if resource growth and downstream discussions continue progressing.

Location is a big drawcard for MRD as the project sits just 25km north of the deep-water Port of Esperance, giving it infrastructure advantages most critical mineral projects can only dream about.

Management also keeps moving fast. The team has rolled from exploration success into target refinement and early processing discussions in a short window, with the latest modelling pointing to a system that could turn out larger than what’s currently been defined.

Fortuna Builds Out Its Commercial Team

Fortuna Metals (ASX: FUN) continued building out its technical and commercial team this week with the appointment of mineral sands marketing specialist Ian Hind, a figure with more than two decades of experience across Iluka, Kimberley Mineral Sands and Strandline Resources.

The appointment matters because Fortuna is starting to think well beyond exploration and toward eventual commercialisation.

Hind brings direct experience in titanium mineral sales, logistics, shipping and offtake, all areas that matter more as projects move closer toward feasibility.

It’s the latest high-profile appointment for FUN as the company continues building a credible team around the Mkanda rutile project in Malawi.

Drilling is also underway on tighter-spaced infill work ahead of a larger aircore program planned for June, targeting mineralisation down to around 20 metres.

With coherent rutile anomalies now stretching across roughly 53km² and higher-grade cores covering around 28km², the scale of Mkanda keeps growing as the company sets up for future resource and offtake conversations.

AZ9 Starts Strong at Red Hill

Asian Battery Metals (ASX: AZ9) has returned to drilling in Mongolia and early signs from the first hole at the newly renamed Red Hill copper-gold project are already looking encouraging.

It has been a little while since the market last had a drilling update from AZ9, but the company has wasted very little time getting back into mineralisation.

The first completed hole intersected visible sulphides including chalcopyrite and chalcopyrite-bornite across two massive sulphide intervals totalling 18.8 metres.

Management noted the changing copper mineralogy and increasing copper intensity may point toward a higher-grade copper zone developing toward the west-northwest of the system.

The hole also hit the targeted electromagnetic conductor pulled from earlier work, giving the team another early tick in the box for its geophysical targeting.

Assays are still pending, but visually the campaign has started strongly. With follow-up drilling continuing and the broader VMS system still largely underexplored, AZ9 looks to have regained momentum heading deeper into the 2026 field season.

Tabcorp Gets Hit By AUSTRAC

It’s not a small-cap, but it is absolutely a punters’ stock, and this week the punt went badly for Tabcorp (ASX: TAH) holders down just over 35%.

The company revealed AUSTRAC, Australia’s anti-money laundering and counter-terrorism financing regulator, had launched an enforcement investigation into Tabcorp’s AML and compliance controls.

The reaction was brutal, with more than $500 million wiped from Tabcorp’s value within hours and the market cap dropping from around $2.63 billion overnight.

The issue is cash. Tabcorp still has exposure to cash betting through pubs, clubs and tracks, which creates obvious monitoring headaches compared to purely digital wagering rivals.

AFR also noted Tabcorp had already been fined $45 million by AUSTRAC back in 2017.

The company says the investigation is early stage and all outcomes remain open, including no further action. But punters know how this works. Once the regulator starts circling, the market prices in pain first and asks questions later.

Regis And Vault Build A Gold Giant

The gold space got another major merger this week, with Regis Resources (ASX: RRL) and Vault Minerals (ASX: VAU) agreeing to combine in a $10.7 billion deal that will create the third-largest gold producer on the ASX.

The combined business is expected to produce more than 700,000 ounces a year and control roughly 20.5 million ounces of gold resources alongside 6 million ounces of reserves spread across Australia and Canada.

This feels like another sign the Aussie gold sector is entering a new phase. With gold sitting at historically strong levels and producers throwing off huge cash flow, the majors are starting to realise scale matters more than ever.

A few years ago the game was all about finding ounces. Now it feels more like a land grab for processing infrastructure and regional dominance.

Western Australia’s Goldfields in particular is starting to look like one giant consolidation battle. Any small-cap that makes a substantial discovery becomes a takeover target very quickly.

The Wrap

Plenty still to land in the next few weeks. Drills spinning up across the portfolio, assays still pending out of Mongolia, and infill work running ahead of Fortuna’s larger aircore program in June.

We’ll also be watching the federal budget closely this coming week, particularly anything that lands on critical minerals, defence spending, or resources tax settings. The detail tends to matter more than the headlines for small-caps.

Gold’s still firm, copper’s still tight, and the juniors are getting busy. Hard to ask for much more than that heading into a budget week.

Till next week.