If you want to hear my take on them, read on.
But, for now, back to Rex Minerals.
Between February and December 2023, its shares were on the slide.
Nearly halving from 30 cents to 16 cents.
Then…
…for what seemed like no reason to outside observers…
…some kind of switch was flicked.
Rex shares halted their fall. And reversed upwards.
By June 2024 the shares were well-up again…trading within a narrow 25–27 cent range.
Big bounce-back. For seemingly no reason.
Then, on 8 July, the reason became blindingly obvious…
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-1.png)
Source: Rex Minerals
It’s clear in retrospect Rex was on the hunt for partners looking to develop Hillside. And on 8 July we got confirmation.
Rex was getting swallowed up.
When the announcement was released on Monday morning…Rex’s opening share price exploded to 44 cents — just shy of Mach’s proposed 47-cent-per-share offer.
That’s an instant 63% rocket…in minutes, right on open.
Not a bad way to start the week for Rex shareholders.
But…
Rewind back a bit further…to when the deal was being cooked up behind closed boardroom doors…
If you’d held Rex shares last December at 15 cents…before their mysterious upwards reversal…you could have made 213%.
In just seven months.
And based on previous examples, that’s not even the GIANT level of returns you can get by being on the right side of a takeover. As I’m about to show you, positioning yourself early in a takeover play can yield gains of 1,500% OR MORE…
But 100% to 300% upside has been pretty standard in the past. If you were an early shareholder on these deals over the last few years.
An often-inexplicable slow-build months before…followed by a brain-melting upward rerating on the day the news finally breaks…
So, what’s all this got to do with you?
Well, as I say, I’ve been actively looking for…
THE NEXT REX
Specifically, I’m zeroing in on three relatively small mining players.
Each exhibit the telltale signs of a takeover brewing.
I believe all three of these stocks have an M&A target on their heads.
There are still great risks in taking a stake now. And I’ll elaborate on those risks a little later.
But if I’m right on just one of these companies…and you own shares before a deal is made…you could see a price rerating following a similar pattern to Rex Minerals.
If the Rex pattern is repeated, we’ll see a slow-build where the deal’s worked out behind closed doors…
Then a 50–100% shoot higher on announcement day.
Or, if you’re really lucky…
A gain that bursts above 1,000% within the course of 12–24 months.
I’ll cover these three potential buyout plays…and some key signs a takeover is in the wings…in this report.
I’ll also properly introduce myself — and why I believe I’m uniquely qualified to give such recommendations in the Australian mining sphere.
But first, we just need to quickly set the stage…
As you’re likely aware, commodity prices are on the rise again.
The two popular metals that tend to lead resource super-cycles — copper and gold — are up 25% and 17% year-to-date.
And in a world of so much outlook uncertainty…
…where share markets are so unpredictable, and politics are playing such a big role…
…this is as close to a sure-thing trend as you’ll get.
Other, less well-known commodities are starting to join the party, too.
The Centre for Economic Policy Research published a deep-dive on this supply crunch on 4 July, 2024:
‘A race is raging among global powers to secure access to critical minerals to power the simultaneous energy and digital transitions the world is experiencing.
‘The extraordinary growth in demand for critical minerals is putting upward pressure on prices and stimulating new critical mineral discoveries all around the world.’
So, you’ve got the main metals powering ahead. And critical metal prices starting to fire up as well.
Now, what’s less well-known…
…is that deal value across the whole mining space is lighting up as well. More and more big companies reckon it’s time to start snapping up assets.
A whole bunch of factors are at play driving this trend…
You have the US election (Lord knows where that race stands at the time you’re reading this)…
Plus…shaky global geopolitics and ongoing wars, reshoring of supplies, underinvestment in mining…
…and of course, the new megatrend of the ‘green transition’…
Right now, we’re in a period of maximum uncertainty — the kind of environment where real assets historically thrive…
And all of this represents a sweet spot for the courageous mining investor.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-13.png)
Source: Motley Fool Australia
We’re entering a phase where the likes of BHP, Rio Tinto, Glencore and Barrick...as well as mid-tier players and huge institutional money interests...
...come knocking on the door of lots of smaller companies, like Rex Minerals.
Instead of spending years ferreting out assets like Rex’s Hillside copper-gold deposit on their own dime…the big guys are opting to just buy them outright.
If you’re willing to swallow the risk, then now’s the time to pre-empt WHICH explorers and developers the major players might go after.
This is a small-window opportunity to make some bets on who might be the NEXT BIG DEAL.
Because the deals are coming.
And the gains are already ramping up.
There’ve been a couple of high-profile ones you might have heard of.
Azure Minerals was at the centre of a fierce takeover battle that took Azure from nowheresville...to a $2 billion market cap...in the space of 12 months.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-2.png)
Source: Australian Mining
Mining mogul Gina Rinehart started building up a stake.
Then SQM Australia made a bid for full control of Azure.
THEN...another company...Mineral Resources...tried to muscle in.
In the end, SQM clinched the buy last December.
If you were lucky enough to watch all this bidding and courting and counterbidding unfold while you owned shares in Azure…
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-3.png)
...you would have done so in growing amazement...as the share price rose 1,500% in a single year while the drama played out.
Koza Gold is another example of the kind of premiums the big guys are willing to pay for the smaller fish.
Its stock went NOWHERE for 12 years.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-4.png)
THEN Koza entered the acquisition mix.
Eventually being bought by big Turkish miner Cengiz Holding for around $670 million in 2020.
And its shares did THIS.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-5.png)
By 2023 Koza shares were at $28.69.
A bottom-to-top gain well over 5,000% if you were lucky enough to own shares at the 2018 low.
Now, multi-thousand percent buyout premiums are outliers.
A 100% to 300% buyout gain akin to Rex Minerals’ result is a more realistic outcome. Just like what happened to another miner, Kaminak Gold.
Kaminak saw its price almost triple in seven months after it was acquired by Goldcorp…
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-6.png)
Sibanye-Stillwater’s $1 billion buy of Hudbay Minerals resulted in a 145% gain in six months…
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-7.png)
Northern Star threw a $193 million offer at Echo Resources, which resulted in a $0.14 to $0.33 share price climb — more than doubling in value...
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-8.png)
In 2021, the Ramelius Resources/Gold Road Resources bidding war over Apollo Consolidated also resulted in the share price doubling...
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-9.png)
Reunion Gold…its shares doubled in four months during merger negotiations with G Mining Ventures.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-10.png)
Nevsun Resources, a copper/zinc miner went from $2 to over $4 in nine months during a buyout by China's Zijin Mining Group.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-11.png)
In some cases, you don’t even need an actual buyout in the works...
...just a curious development that suddenly puts a relatively obscure explorer or developer on the buyout radar.
For instance, on 9 May 2024 Alliance Nickel saw its share price surge 177% IN A SINGLE TRADING SESSION…
...when the Australian federal government granted its NiWest nickel-cobalt project ‘Major Project Status’.
Pretty basic point here:
The gains if you get on the right side of these deals can be BIG and FAST.
And all the above examples are from a lull period in M&A activity...
...when the dealmaking cycle has been off-the-boil.
The whole reason we’re talking to you now is I reckon we’re entering a prolonged phase of BUYOUT OVERDRIVE...
The established miners don’t have the time...resources...or inclination to bugger around with exploration.
But what they DO have is money.
They want existing projects. Ideally low-cost and long-life. And in parts of the world with low political and legal risk.
Put simply:
It’s BUY vs Build…
And BUY has now become the go-to play.
Early in 2024, a new commodity supercycle emerged…where base and precious metals reawakened from their multi-year slumber.
But while the last supercycle was driven by DEMAND from China…
This supercycle is being driven by SCARCITY.
For too long, the world’s largest miners have shelved their exploration ambitions. They’ve been repulsed by the enormous capital commitment involved in finding and developing new mines.
But an aversion to growth can only have one outcome…
Falling supply.
This is a story that’s taken years to unfold. And it has its roots in the overexuberant investment phase of the last mining boom, which lasted from 2003 to 2012.
In the years that followed, mining executives received a walloping from shareholders who questioned their ability to read the market. Here’s what I mean…
At the peak of the last boom, many of the world’s largest miners succumbed to buyout fever.
Bidding wars erupted, with big miners suddenly desperate to grab hold of juniors that were in hot demand.
As the graphic below shows, total deals (and their overall value) peaked in 2011–12, at the very top of the last commodity bull market.
![...](https://fattail.com.au/wp-content/uploads/2024/08/DIG-The-NEXT-Rex-Charts-12.png)
Following this irrational exuberance, CEOs across the industry were given the boot — from Rio Tinto to Barrick Gold.
It’s a nightmare that looms large over mining executives to this day.
And it’s a key reason mining firms have failed to invest in new projects over the last decade.
Yet…
This new uptick in M&A will do nothing to address the supply problem. It simply transfers ownership of one project to another…
But capital starvation can only last so long. Eventually, something has to break.
For example, copper prices have tested all-time highs in 2024.
How high can copper go? We can only guess.
But any move higher could set off a chain reaction fuelling even more M&A activity.
That’s MY take.
And it’s why I’m pulling the trigger on THREE SPECIFIC future potential buyouts…that the mainstream isn’t talking about yet.
Right now, mining firms have two options:
They can either make meaningful investments in new exploration and grow slowly from within…
OR…
They can acquire those projects NOW to leverage their exposure to the coming boom.
In my mind, the latter is much more likely.
Like I say:
BUY is the preferential play over explore and build.
But who’s next on the hitlist?
It’s trickier to pinpoint these stocks than you might think.
For many years, Rex Minerals looked like a dog of a stock to own.
10 years ago, copper prices were in the doldrums.
Rex had released a disappointing feasibility study demonstrating their project was unviable. And their chief, Mark Parry, had just handed in his resignation.
The company’s share price plunged almost 80% by the end of 2014.
Now, speaking as someone who worked for these types of companies…
…when that happens to an explorer, you often need to call a priest in to deliver Last Rites.
To make matters worse, there was strong community pushback against Rex’s Hillside development…a project that falls on prime cropping land and just a stone’s throw from a popular holiday destination on the South Australian coast.
But 10 years is a long time in mining…
And copper has had a stunning bounce-back after a depressed decade.
Former ugly ducklings who for years looked as if they were too low-grade to warrant development are now becoming the new market darlings.
That’s why Hillside is now a prime acquisition target.
And this is how the mining cycle turns…
Marginal projects are re-emerging as viable solutions (or even the ONLY solution) to address future supply shortfalls.
As OilPrice.com bluntly put on 15 July:
‘Merger mania has
hit
the mining sector.’
OilPrice.com
So, let’s get to the crux…
How do you play this M&A trend the smart way as an Aussie investor?
Because it's fairly clear a land grab for metal and mining assets is leading to a spike in M&A activity…both here in Australia, and all over the world.
Rio Tinto alone is reportedly mulling a slew of takeover deals as I write this.
The industry rumours right now are that they’re drawing up a bid for Canadian miner Tech Resources.
Barrick has swallowed Randgold…Newmont’s snapped up GoldCorp…Agnico-Eagle has merged with Kirkland Lake Gold…then Agnico-Eagle and Pan American Silver bought and split up Yamana Gold…right before Newmont jumped on Australia’s Newcrest.
And these are just the first shots fired.
So, who’s next…?
I know from experience not every small miner that talks a good book is a viable buyout target.
There are some pretty obvious things to look for in potential targets — like a promising deposit in a critical metal in a strategic location. But that’s just the beginning of the story…
So, what I’m going to do from here is give you three telltale signs that could signal a potential buyout is on the horizon…
As well as tell you about three SPECIFIC stock recommendations.
Now, ask a mining engineer or financial analyst and they'll probably tell you to scan the books. Look at the production over several years — is there consistency, has it met guidance?
Those things are important.
But trust me: at this stage of the M&A cycle, it’s all about GEOLOGY.
In other words, the assets sitting in the ground that have been found, but not mined.
So, from the outset you should be looking at things like grade, metallurgy, and how much metal you can actually recover from a newly-found deposit.
Also, exploration upside.
A big miner looking at these projects wants to know whether there’s FURTHER potential for discovery.
Can they add value to that deposit?
I’m going to give you some inside intel here, from my perspective, on how to spot these corporate manoeuvres ahead of the crowd. And then we’ll move on to SPECIFIC RECOMMENDATIONS…