For many junior mining companies, listing on the ASX is a key step to raising the necessary capital to keep their company afloat.

However, rare earths player VHM Ltd has taken a more patient approach.

Founded in 2014, the company’s flagship asset is its Goschen project — a zircon and rare earths mine located in the Loddon Mallee region of Victoria.

VHM is led by former Newcrest executive Graham Howard and counts mining rich-lister Chris Ellison as its largest shareholder.

And it continues to operate with an unlisted public structure comprising around 140 shareholders, most of whom are wealthy individuals and industry veterans.

As executive director and CFO Michael Allen explained to Stockhead, there are “no cowboys” on the register.

While an ASX listing is still “firmly on the radar”, VHM has found that so far, its knowledgeable investor base has been happy to tip more money in as its promising resource continues to get proven up.

Over the last 18 months, Allen says VHM has grown its market cap from around $10 million to $65m, “and we expect it will continue to grow at that speed”.

Tapping the (private) markets

With a promising rare earth play on its hands, Allen says when it comes to a public listing “you’ve got to get the timing right”.

“If you list early-stage, often you take a relatively heavy discount on what you could achieve. Whereas the more you prove up your resource and deposit, the better you will do.”

Allen said VHM has been considering a listing for some time, but if you can raise capital without doing it, why rush?

By bringing on substantial investors via private markets, VHM can improve cashflow but it also helps “build the reputation and credibility of the company”, Allen says.

Leveraging its strong track record, VHM turned back to its investor base for another funding round earlier this year. Only problem was, things went a little too well.

“We commenced a cap raise in March but had to terminate it early, because we had more emerging good news and we couldn’t allow new investors to come in,” Allen said.

Metallurgical testing results confirmed the mine’s resources were recoverable, “and at grades greater than what we had previously indicated”.

“Now we’re commencing the capital raise again — but at a higher share price,” Allen said. The company has just commenced its revised funding round which will run until the end of May.

Back in March, VHM advisor JP Morgan was tasked with drumming up another $20 million from institutional investors.

Allen told Stockhead that VHM was “fortunate” to have the global bank in its corner. “It’s really unusual for a company in our position to have an international corporate advisor along with us,” he said.

VHM completed a pre-feasibility study earlier this year and the funds are expected to go towards land acquisitions and more engineering tests.

Once every 40 years

Allen explained that the Goschen project was previously mined as a mineral-sand ore body, which is known to contain zirconium. But the key feature of the mine is the granite which sits under the mineral sands.

“Granite is what hosts rare earths – rare earths are generally found in hard rock,” he said.

“Because the environment had been there for many years, the mineral sands had accumulated. And there were suspicions about an abundance or rare earths, because the previous operations weren’t really looking for those minerals.”

He added that the mineral sands industry is one that “hasn’t changed a lot the last 40 years”. But VHM has added value by adopting “a more systematic approach”.

“When we assess a deposit, we take it through a full metallurgical process to firstly prove what’s in the ground, and also prove what you can recover.

“And we found that our methodology was showing results far in excess of historic results.”

While Goschen represents VHM’s main focus, the company will deploy some of the capital raised in its current round towards exploring other projects that “could be just as promising”.

“And we also have a vision to process rare earths downstream, that’s the real innovation,” Allen said.

So as part of the current value proposition, there are two other prospects in the immediate area, plus the intention to establish a rare earths processing capability.

“We plan to deliver ongoing growth in the value of this company over the next few years, it won’t just be the Goschen project alone.”