In a week where broader market momentum seemed to stall as the corporate year wound down, a handful of small-cap stocks on the ASX delivered explosive returns, defying the subdued festive season mood. The standout performer was a water treatment company staging a remarkable comeback, while gold and copper-related deals fuelled significant gains for three other contenders.
Market Backdrop: A Tale of Two Economies
As December began, the Australian sharemarket lacked major catalysts, especially compared to the political volatility seen earlier in the year. Attention turned to economic data, with lingering US jobless figures suggesting a potential soft landing. While the US Federal Reserve is widely expected to cut rates, the Reserve Bank of Australia faces renewed pressure as inflation crept back towards 3.8%, likely halting any local rate cut plans.
Analysts point to a deepening divide in the economy. Wealthier households continue to spend on luxury items and holidays, while many others grapple with mortgage stress amid the ongoing cost-of-living crisis. This dichotomy, described by Bank of America as "the floor stabilises before the ceiling finally caves in," underscores the uneven pressure. While major indices are propped up by a few giant companies, a broader slowdown is evident, particularly in the small-cap sector.
Commodity markets told their own story. Copper prices charged to record highs amid supply disruptions and dwindling inventories, boosting giants like BHP and Rio Tinto. The remarkable rise of China's Zijin Mining, now challenging BHP for top spot, highlighted state-backed expansion. Conversely, gold and silver stocks faced pre-Christmas profit-taking, and cryptocurrencies like Bitcoin extended sharp declines, signalling a broader 'risk-off' shift.
The Week's Top ASX Runners
Against this complex backdrop, four companies emerged as the week's biggest percentage gainers, led by an extraordinary resurgence.
Phoslock Environmental Ltd (ASX: PET) Up 467%
Phoslock Environmental Technologies is the undisputed Runner of the Week, with its share price catapulting from 0.6 cents to 3.4 cents. The catalyst was news that the company will restart manufacturing at its Chinese facility in January 2025. Phoslock's proprietary product binds phosphorus in polluted water bodies.
The company previously generated significant revenue from China's vast environmental clean-up projects, with sales hitting $3.5 million in its first full year after 2017. After halting production in 2021, depleted inventories have prompted the restart. The plant has an initial annual capacity of 3,000 tonnes, with room to double output if demand returns.
Investor enthusiasm was immense, with 265 million shares traded on Wednesday alone – surpassing the entire volume for 2023. This surge marks a potential turning point for Phoslock, which has endured two lengthy suspensions from the ASX since 2020 related to self-reported governance issues.
Black Horse Mining Ltd (ASX: BHL) Up 90%
Securing a strong second place was newcomer Black Horse Mining, which made its ASX debut on Tuesday. The gold explorer completed an $8 million IPO at 20 cents per share, with strong backing from cornerstone investor Province Resources. Shares immediately jumped to a 38 cent peak on the first day.
The company's focus is the historic Mt Egerton gold project near Ballarat, Victoria, within the prolific Bendigo-Ballarat province. The area has historically produced over 80 million ounces. Black Horse aims to apply modern exploration techniques to identify high-grade gold lodes overlooked in the 19th-century rush, with drilling already underway on shallow targets.
DGR Global Ltd (ASX: DGR) Up 84%
Resources incubator DGR Global surged on M&A activity involving its key asset, a 6.8% stake in London-listed SolGold Plc. SolGold owns the massive Cascabel copper-gold project in Ecuador and this week rejected a conditional takeover bid from China's Jiangxi Copper. The rejection sent SolGold's share price above the offer, implicitly valuing DGR's stake at approximately A$127 million – far above its own market capitalisation of around $40 million.
Cascabel is a world-class project. A pre-feasibility study for its Alpala deposit outlined a potential 12 million tonne per annum operation, projecting an after-tax net present value of $3.2 billion at conservative metal prices. With copper at record highs, the project's economics are increasingly attractive, putting DGR in a strategic position.
African Gold Ltd (ASX: A1G) Up 75%
Rounding out the list was African Gold, which leapt following a merger proposal from its major shareholder, TSX-listed Montage Gold. The all-scrip deal values the ASX junior at $264 million, a 59% premium. The transaction centres on African Gold's Didievi project in Côte d'Ivoire, which hosts a 989,000-ounce gold resource.
The move is part of a consolidation wave in West African gold. It was quickly followed by Perseus Mining's $1.62 billion bid for fellow ASX-listed Predictive Discovery. The merger gives African Gold shareholders exposure to a larger, better-capitalised company with a nearby development project, Koné, slated to produce over 350,000 ounces annually from 2027.
Outlook: Niche Opportunities in a Slowing Market
This week's runners demonstrate that even in a thinning market, specific catalysts – from operational turnarounds and successful IPOs to strategic M&A – can generate outsized returns. The concentration of winners in the gold and critical minerals space underscores where investor interest and corporate activity remain fervent. For savvy investors, these movements highlight the continued importance of company-specific stories amid broader macroeconomic crosscurrents.
