Copper explorer Coda Minerals' IPO beats expectations

Gindalbie Metals spin-off company Coda Minerals’ IPO was heavily oversubscribed
IPO raised $8.5m to further develop its flagship Elizabeth Creek copper project in South Australia
Copper project is located in the Gawler Craton, home to BHP’s Olympic Dam mine

Coda Minerals will join the ASX’s boards in mid-October after an oversubscribed $8.5m IPO, as it gears up to advance its cobalt-copper project in the same region as BHP’s (ASX:BHP) mammoth Olympic Dam copper mine.

The IPO opened September 12, and within 24 hours had resulted in bids for $12.5m, allowing the company to increase its maximum subscription to $8.5m, exceeding expectations.

“The funds received provide Coda with a strong platform to commence planned exploration activities and we expect to be mobilising our drilling team to Elizabeth Creek by mid-October,” chairman Keith Jones said.

The IPO was initially for a minimum issue of 16.6 million shares and up to a maximum of 21.6 million shares priced at 30c each and closed Tuesday, according to the company’s prospectus.

Chinese steel group Ansteel has a 20.8 per cent shareholding in Coda that will be diluted to between 15 and 16 per cent if it does not buy any more shares in the IPO.

Coda Minerals is finalising its application process for admission to the ASX.

Elizabeth Creek in the same region as BHP’s Olympic Dam

The explorer is able to earn a 75 per cent interest in the Elizabeth Creek project by way of a staged farm-in, with its equity interest rising in line with exploration spending.

Already, $5.6m has been spent by the company on exploration at Elizabeth Creek in which it currently has a 51 per cent interest.

Coda Minerals can increase its stake to 70 per cent on spending a total of $6.6m on exploration for the project.

Elizabeth Creek is located 135km north of Port Augusta and 100km south of BHP’s big Olympic Dam mine.

The project is host to different styles of copper mineralisation, including iron oxide copper-gold deposits typical of the Eastern Gawler Craton.

Elizabeth Creek has a JORC-compliant resource of 159,000 tonnes of copper and 9,400 tonnes of cobalt on an indicated basis.

The company is targeting a resource of 1 million tonnes of copper by 2021.

The Gawler Craton is host to a number of high-profile mining operations, including BHP’s Olympic Dam copper-uranium mine, and OZ Minerals’ (ASX:OZL) Carrapateena and Prominent Hill projects.

Coda Minerals’ Elizabeth Creek project in South Australia is close to high-profile copper mines. Source: Coda

Coda’s beginnings

Coda Minerals was born of a demerger from iron ore company Gindalbie Metals in July.

It was created to explore for high-grade copper-cobalt resources at the Elizabeth Creek project in South Australia’s Gawler Craton.

Early in 2020, former Gindalbie shareholders were offered the opportunity to exit their holdings in Coda Minerals through a voluntary share sale facility.

A large number of the company’s 2,200 former shareholders took advantage of the facility, leading to a consolidation of its share register into a small group of sophisticated investors.

Gindalbie was delisted from the ASX in July 2019 on its $25m acquisition by Ansteel Group.

The iron ore company’s main asset was its Karara magnetite iron project 200km east of Geraldton in WA.