Small caps did the heavy lifting this week, led by two big discovery stories in resources. Funding raises and takeover moves kept attention on who can pay for the next step, not just promise it.
- Terra Metals jumped on a high-grade PGM hit, while Tungsten Mining surged on booming prices and a strong early-stage study.
- Arafura Rare Earths slid hard despite a large equity raise, as investors worried about dilution and the long wait for a final go-ahead.
- Defence tech names pointed to big pipelines and backlogs, but some still fell as traders locked in gains.
- Deal-making stayed busy, from insurance broking offshore to gold and lithium consolidation.
The biggest moves came from Terra Metals (ASX:TM1) up 52.38%, Tungsten Mining (ASX:TGN) up 48.89%, and Arafura Rare Earths (ASX:ARU) down -20.69%. TM1 ran after reporting very high platinum-group metal grades close to surface at Dante. TGN lifted on a mix of a large capital raise, a scoping study with big numbers, and a tungsten price jump. ARU fell even after raising a large amount of money, because new shares can dilute existing holders and the project still needs a final investment decision.
Discovery wins: when one drill hole changes the conversation
Terra Metals (ASX:TM1) rallied after it reported up to 52.97 g/t PGE3 in a one-metre interval, inside a broader 14-metre zone. In plain terms, investors saw “high grade” plus “near surface” and started pricing in a faster, simpler mine plan. The company also said the mineralised zone is still open in all directions, which means more drilling could extend it. Tungsten Mining (ASX:TGN) had sustained buying after reopening from a price gap. That usually means new buyers kept stepping in, not just existing holders taking quick profits. Investors had two clear reasons to pay up: tungsten prices are rising fast, and the Mt Mulgine scoping study pointed to a large project if the early numbers hold up.Big raises can still fall: “more cash” also means “more shares”
Arafura Rare Earths (ASX:ARU) raised A$481 million and ended the quarter with A$571 million cash. That’s a strong war chest. Yet the stock dropped heavily. The simplest explanation is dilution. A big placement issues lots of new shares, so each existing share can represent a smaller slice of the company. Arafura also pointed to a final investment decision in 2026 for Nolans. For beginners: that is the board’s formal “yes” to build. Until that happens, the market often debates cost blowouts, build delays, and whether customers will keep offtake commitments if prices move.Deal-making: buying scale, selling risk
AUB Group (ASX:AUB) announced a large UK acquisition and a fully underwritten A$400 million placement. The share price slipped -5.33% for the week. Part of that move is mechanical. Placements are often priced at a discount to entice big buyers, which can pull the traded price down. In gold, Orezone Gold (ASX:ORE) gained 9.38% after agreeing to buy the Casa Berardi mine in Québec. Investors cared because it adds immediate production and reserves in a stable jurisdiction. The trade-off is deal complexity. The funding includes a gold stream, which means giving up a portion of future gold sales to the financier.Defence and security tech: big backlogs, but profits still matter
Electro Optic Systems (ASX:EOS) spoke to a record contract backlog and new contracts, yet the stock fell -16.14%. DroneShield (ASX:DRO) also dropped -25.73% despite reporting FY2025 revenue up 277% and a $2.09 billion sales pipeline. For beginners: a “pipeline” is a list of potential deals, not guaranteed sales. Traders often sell after big announcements if the share price had already run hard, or if they worry margins will tighten as companies scale manufacturing.Commodities: strong prices helped, but timing still bites
A run of miners reported solid output and expansion work, yet several shares still drifted down. Liontown (ASX:LTR) fell -15.30% even after higher revenue and lower unit costs. In lithium, investors often want to see not just better operations, but also sustained higher prices and consistent cash generation. In uranium, Bannerman Energy (ASX:BMN) rose 11.24% as it kept Etango progress on track and pointed to higher long-term prices. Toro Energy (ASX:TOE) gained 8.70% on a takeover offer at a large premium, which is a simple catalyst: the bid sets a reference price for the stock.Bottom Line?
Into February, investors are likely to keep rewarding clear “next step” dates: commissioning updates (Capricorn Metals’ Karlawinda expansion), permitting and government reviews (Predictive Discovery’s Bankan permit), and near-term study read-outs (Carnaby’s PFS nearing completion and expected Q2 2026 decision). Big raises will stay polarising until companies show that new cash turns into real progress, not just longer timelines.
Questions in the middle?
- Will Terra Metals (ASX:TM1) show that the very high grades repeat across more drill holes, or was it a one-off spike?
- Can Arafura Rare Earths (ASX:ARU) hold its cost and schedule targets through to its planned 2026 final investment decision?
- For defence tech names with large pipelines, how much turns into signed contracts in the next two quarters, and at what gross margin?