Tim Hoff is chasing value on the mean streets of Kalgoorlie. Pic: Getty Images
Each year we catch up with Canaccord Genuity mining analyst Tim Hoff at Diggers and Dealers in Kalgoorlie to get his best ideas for the year ahead. Check out where he’s looking for value in 2025.
After an enormously successful 2023 instalment, Canaccord’s Tim Hoff has had reason to be chirpy about his Diggers and Dealers stock selections.
Powered by market darlings Spartan Resources (ASX:SPR) and Azure Minerals (ASX:AZS), a $10,000 investment in August 2023 would have netted $21,600 by last year’s conference.
Last year, Hoff correctly predicted small cap punting would be a harder task in turbulent markets.
Spreading himself thinner across 13 small cap names, a 105% 12-month lift in copper explorer Prospect Resources (ASX:PSC) and 95% gain for South American silver stacker Andean Silver (ASX:ASL) proved the standouts of a kaleidoscopic mix of speculative names.
All up the gains and losses of a hypothetical ‘Hoff Diggers portfolio’ would have evened out to 10.85% on the year.
“Look last year we were sitting here and we thought it would be difficult,” he said.
“And honestly I hadn’t looked at the numbers until today and I was fairly surprised to see that the portfolio, the ideas that we came through with on average were up.
“When we break down some of the trends within that, you can see some of the exploration plays had a hard time.
“That is the nature of exploration and greenfields exploration. You can see gold and precious metals benefited from positive commodity pricing, so that that really flowed through. And then the base metals where we were a little bit split between the names we had there, we had a couple of winners and a couple of losers.
“When we take a step back, I feel like the year panned out roughly how we were thinking.”
Another $10,000 investment would have taken the hypothetical portfolio to $11,085, or if Hoff’s take from 2023 were compounded, a $23,944 pool would be sitting there to take off the table or go again.
So what is Tim Hoff eyeing this time around?
Looking for discoveries
The big thing Hoffy is looking for is small caps with the potential to make a discovery.
That’s getting easier in the gold space, where record prices are stirring rising valuations, with exploration budgets lifting as capital raises become easier and less dilutive.
But it’s a double-edged sword. Hoff is looking for stocks that can go multiple times, and a number of gold names are already running hard.
And it’s not just the now heavily covered gold sector where discoveries and rerates are on the cards.
“Obviously we had Trump come through in November, and that’s set a whole series of events in place like the bull run in gold pricing, with the rare earths sector certainly performing very well on the back of that.
“And so there’s always something happening in this market and pockets of interest.”
Hoff’s 2025 Diggers portfolio
Prospect Resources (ASX:PSC)
Prospect is the only repeat entry in this year’s picks from the Canaccord number cruncher.
It owns the Mumbezhi project in Zambia, where Prospect has already outlined one of the largest undeveloped copper deposits on the ASX with over 500,000t of copper metal at grades of 0.5% Cu.
That puts it right in the wheelhouse of neighbour First Quantum Minerals, which picked up a 15% stake in the junior this year as questions circle the long-term future of its nearby Sentinel mine.
Hoff is doubling down even after a ripping 12-month run.
“This is a coverage stock that I have on take-out watch. Right next door to their project in Zambia, you have 60 million tonnes of processing capacity.
“It’s owned by First Quantum. In 2029, the grade falls from 0.5% to 0.3%, and 2034 they run out of ore. You’ve got billions of dollars of sunk cost infrastructure there. And having that sit idle is not a tenable situation for a company like First Quantum.
“So we think they’ll get taken out. And if they don’t we think that the project and the deposit has the potential to seriously grow tonnes from here, which is why I still think it’s heavily undervalued at the moment.
“It’s heavily discounted still by the market, which hasn’t yet come to fully grasp what’s going on there.”
Loyal Metals (ASX:LLM)
A lithium refugee, Loyal had its big coming out party in July when it procured the Highway Reward copper-gold mine in Queensland.
It’s now up 122% over the past month.
One of the world’s highest grade copper mines historically, past production saw 3.65Mt at 5.7% Cu and another 260,000t of gold ore at 4.5g/t Au.
Since mining ended 20 years ago, copper prices have risen 680% and gold 1256%.
“It’s a high-grade copper project. It was smaller tonnes, it’s a smaller footprint, but Loyal are looking for depth extensions, and there’s been nothing done on this project for 20 years. No major modern geophysics, no drill program.
“So they’re looking for proximal discoveries, discoveries at depth or some targets that were never tested. So that’s really exciting to us.
“Market cap’s about $25 million at the moment. We’re starting from a nice low base there.”
Peak Minerals (ASX:PUA)
Peak Minerals is one of a number of small caps enjoying the emergence of the Cameroon exploration scene, where it and DY6 Metals (ASX:DY6) have made rutile discoveries and Canyon Resources (ASX:CAY) is progressing its Minim Mirtap bauxite project.
It was on a trip to Cameroon to see the latter that Peak piqued the interest of Hoff.
“They’re in the process of discovering what looks to be significant rutile discovery. Now mineral sands, there are varying grades and assemblages from lower value to higher value.
“What they’re discovering appears to me to be a really high value mineral sands discovery.
“The stock’s performed really well over the last couple of months. But I think … this is when we see global scale projects, often the market will trail the results. And I think if this was in Western Australia, it’d be a much bigger company already.
“The fact that it’s in Cameroon and … I don’t know anyone else who’s been there, I think that holds investors back sometimes and provides the opportunity for those willing to look over the border.”
Q2 Metals Corp (TSX-V:QTWO)
For the first time, Hoffy is taking his hunt for deep value global with TSX.V-listed Q2, which runs at a market cap of just C$117m.
That betrays the very large potential resource its attempting to drill out at the Mia lithium project in Quebec.
Lithium prices are, as is well known, in the dunny. But recent spot price increases and optimism that demand could soon overtake supply again has analysts thinking more proactively about underappreciated opportunities in the space.
“We’ve written research on this. We think there’s 207 million tonnes of spodumene there at grades of 1.3% lithium or more,” Hoff said.
“That puts this as potentially the sixth largest deposit in the world, sitting there with a fairly low market cap at the moment relative to that.
“So I think any recovery that we see in the lithium market will translate to names like this, where there’s a huge valuation gap between Patriot and Q2. Q2 is further down the line, but 200 million tonnes, again, this is something really big and their exploration target recently was even bigger than that.”
Torque Metals (ASX:TOR)
Hoff’s last pick is his only gold name, the Tolga Kumova-backed Torque.
It has assets in Canada and Australia, primarily focused on the Paris gold project near Kambalda and Kalgoorlie in WA’s Eastern Goldfields.
“Torque’s got some really interesting discovery holes coming through for a 100-mil market cap business at the moment.
“Gold being that hot, it won’t take long for the market’s eyes turn to some of the results and you’ll see the share price performance come behind that.”
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