From defence metals to gold mergers: Portfolio moves in March 2025
March was anything but quiet for markets — and the SGH Opportunities Fund remained active, selective, and focused on valuation.
In this monthly update, Portfolio Manager Rory Hunter and Sophie Smith, Investment Analyst, walk through how the Fund delivered +0.5% for the month — outperforming the benchmark by more than 4% — and repositioned to capture emerging themes across strategic metals, gold, and electrical services.
Listen to the full update below:
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Transcript:
Rory: Welcome back to the SGH Opportunities Fund monthly update. I’m Rory, and with me as always is Sophie. Sophie, welcome back—how are you?
Sophie: Hey Rory, going well! We are here today to discuss March, a month that has already thrown up some big developments across the ASX—particularly in gold, electrical services, and strategic metals. A few portfolio changes on our end too, so I’m keen to unpack it all.
Rory: Absolutely. Let’s start with the headline news—Ramelius Resources merging with Spartan Resources to create one of the ASX’s next large cap gold producers. This deal sets the group on track to hit 500,000 ounces per annum by FY30 with industry leading all in sustaining cost margins.
Sophie: The deal’s a mix of cash and scrip, valuing Spartan (ASX: SPR) at around $1.78 per share. From a shareholder perspective, Spartan investors get $0.25 cash and 0.7 new Ramelius shares for each Spartan share. Once it’s done—likely by late July or early August—Ramelius shareholders will own 60.5% of the merged company, with Spartan holding 39.5%.
Rory: What I like here is the strategic fit. Ramelius brings operational expertise, a solid track record, and low-cost production assets. Spartan, meanwhile, adds high-grade development assets to what was a depleting production profile. The potential syergies are going to surprise the market.
Sophie: And those margins matter. Ramelius already runs with a healthy all in sustaining cost margin, which gives them strong free cash flow—a huge advantage as they absorb Spartan’s development projects. Plus, they’re promising a feasibility study and 10-year outlook by the end of 2025, which will be a major re-rating catalyst.
Rory: We’ve actually re-entered Spartan post-announcement. If the price drifts, we’ll look to build further—the combined business has the makings of a producer that is deserved of a premium valuation.
Rory: Let’s pivot to another smart acquisition —Southern Cross Electrical (ASX: SXE) acquiring Force Fire Holdings.
Sophie: This seems to be a really savvy acquisition. $36.3 million upfront, potentially rising to $53.5 million if EBIT targets are hit in FY26 and FY27. Force Fire operates in NSW and Queensland, specialising in fire detection and safety systems—and they’re budgeting $106 million in revenue and $8.3 million in EBIT for FY25.
Rory: That means an 18% EPS uplift for Southern Cross based on a 4.8x EV/EBIT multiple. What I like is the recurring nature of Force Fire’s revenue—about 30% comes from services and maintenance, which adds reliable profitability.
Sophie: Plus, Force Fire covers both wet and dry fire systems—mechanical and electrical—so there’s real capability breadth. Southern Cross are already flagging cross-selling opportunities, and targeting at least $10 million EBIT by FY26 from the new division.
Rory: It’s a bolt-on that makes perfect sense and funded through cash reserves, no debt, and well-aligned with their existing client base. With the Southern Cross margin profile at 6%, and Force Fire running at 7.8%, there’s potential to improve group profitability too.
Rory: On the thematic side, our strategic metals positions have continued to do well, boosted by rising European defence spending – which we think is a thematic that is unlikely to go away in the medium-term. Larvotto Resources (ASX: LRV) was up 33%, and Almonty Industries (ASX: AII) up 18% for the month.
Sophie: A big tailwind here has been the EU’s “Readiness 2030” defence plan, announced by Ursula von der Leyen, which commits €800 billion euros to military capability upgrades. That’s put a rocket under defence-exposed names.
Rory: Exactly—European contractors like Rheinmetall, Leonardo, BAE Systems, and Thales all posted double-digit gains—Rheinmetall up 13.7%, Leonardo 16%. The macro environment is shifting fast, and strategic metals like tungsten and antimony are reasonably seen as part of the defence supply chain.
Sophie: That dynamic’s not going away anytime soon. And what about changes to portfolio positioning during the month?
Rory: We’ve done a bit of trimming. Larvotto—great run, but upcoming DFS and potential metallurgy risks had us de-risk slightly. We also cut our position in Generation Development Group (ASX: GDG). It’s been a top performer, especially after index inclusion into the Small Ords, but valuations are stretched and it’s now a crowded trade.
Sophie: And we also sold out of Genesis Minerals (ASX: GMD), right?
Rory: Correct. We rotated Genesis into Spartan, which we see as having a better risk-return profile given the Ramelius tie-up and the relative valuations. On the buy side, we added to Botanix Pharma after a pullback that we think was unwarranted.
Sophie: And for clarity, Botanix is commercialising a dermatology asset for hyperhidrosis treatment, right?
Rory: Yep. There was no commercial update in the first half result, which spooked some holders, but sales are progressing well, and management remains confident about getting to breakeven on current cash. We’re backing them in.
Rory: So, to wrap it up—Ramelius and Spartan create a compelling new gold mid-cap, Southern Cross adds stable cash flow via Force Fire, and we’ve been busy rebalancing the portfolio to stay ahead of shifting macro themes.
Sophie: Plenty of opportunities out there, and the macro environment demands an agile portfolio positioning strategy.
Rory: That’s right Soph. We’ll be back next month with more market insights and updates from the portfolio so until next time, thanks for tuning in to SGH Opportunities Fund monthly update.
Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for “the Fund” mentioned in this recording. Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT).
This update has been prepared by SG Hiscock and Company Limited to provide you with general information only. In preparing this update we did not take into account the investment objectives, financial situation or particular needs of any particular person and is not investment advice. Neither SG Hiscock and Company Limited, Equity Trustees nor any of its related parties, their employees or directors, provide and warranty the accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance is not an indicator of future performance.
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