I'm a big fan of identifying up-and-coming miners in the development phase and buying them before they turn their projects into real money-spinners.
But given that there are literally hundreds of junior mining companies listed on the ASX, it's useful to get a steer from the brokers as to which companies are worth a look.
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New company in the spotlight at Morgans
One company which the brokers at Morgans have just started covering is Horizon Gold Ltd (ASX: HRN).
Horizon shares are up almost 60% over the past 12 months to $1.17, valuing the company at $212.8 million.
Horizon on 12 October reported some good drilling results, with the best a 44m intersection at a grade of 5.08 grams per tonne of gold.
There were plenty of other good results, or in the company's own words, "numerous spectacular intercepts".
The new drilling returned good results across three separate prospects, which I found encouraging. Managing Director Scott Williamson said the results suggested the company could aim to plan for a larger open-pit mine and potentially underground mining.
The company has follow-up drilling already under way.
In a note to clients, Morgans said the company's Gum Creek gold project was attractive as it was, "a simple, de-risked, free-milling open pit development with robust definitive feasibility study economics, a defined pathway to first gold and substantial resource upside beyond the current mine plan''.
The broker said there was a clear pathway to a final investment decision followed by first gold production in early FY29.
Morgans has a price target of $3.03 on Horizon compared to the current price of $1.17.
Definitive feasibility study not far off
The other company that piqued my interest was Minerals 260 Ltd (ASX: MI6), which is developing the BullaBulling gold project near Kalgoorlie in Western Australia.
The company is working on its definitive feasibility study, which is on track for Q1 FY27. So, it ticked my box for being mid-development.
The company is already building the on-site village, and its remaining approvals are in train with the Western Australian government.
It's also encouraging that the company is well-funded, saying in an announcement on 27 October it had cash on hand of about $600 million.
On 28 October, Bell Potter released a new research report on the company with a speculative buy rating.
The broker said the company was heading into a "catalyst rich" period over the next six to nine months, with milestones such as the definitive feasibility study and a final investment decision to be ticked off.
Despite its shares rising around 180% over the past 12 months, Bell Potter believes it can surge higher.
The broker has a $1.45 price target on the company, which sits materially above the current price of 77.75 cents.
My takeaway
I like both of these gold developers for the relative simplicity of their projects, a clear timeline for development, and the potential for more upside from exploration.
They are both situated in Western Australia which is a good jurisdiction for gold miners, and both have the potential for serious upside over the next 12 months.
Naturally there is execution risk with both projects, but that's why there is the potential for large gains, as the risk is being priced in.
I'd split $5,000 evenly between these two companies and see how they go.
