IPO Watch: QEM launches $5m vanadium offer ahead of ASX listing
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Vanadium is one of the resources firecrackers of the moment, making it the perfect time to try to launch a new vanadium IPO — as QEM is doing.
The price of vanadium has rocketed in the past few years, bringing big returns for stocks such as King River Copper (ASX:KRC), Australian Vanadium (ASX:AVL) and Tando Resources (ASX:TNO).
Queensland Energy and Mining, which has taken “QEM” as its new moniker, reckons it’s a vanadium pocket rocket too — with an oil shale project on the side.
QEM is offering 25 million shares to raise $5 million for a $20 million market cap.
>> Scroll down for a list of upcoming ASX IPOs
It has another $480,000 in the bank according to the prospectus.
QEM was founded in 2014 to develop a vanadium and oil shale project in the Julia Creek area of North Western Queensland.
Most of the funds ($2.8 million) will be used to develop the Julia Creek project while $2.2 million is reserved for working capital and $510,000 will go towards the IPO costs.
Vanadium + oil = the most popular kid in town
The Julia Creek project has three wholly owned exploration permits covering 176 sq km and is near the Flinders Highway and the Great Northern Railway line, which connects Mt Isa to the Townsville port.
The project has an inferred mineral resource for vanadium pentoxide of 1,700 Mt at 0.34 per cent, and a contingent 3C petroleum resource estimate of 589 million barrels.
Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.
Contingent petroleum resources are known, potentially recoverable volumes with a development plan that is not yet commercial, and rated as 1C, 2C and 3C according to low, best and high estimates.
A 1C resource is a low estimate and a 3C is high.
After listing, QEM will start a drilling program and undertake engineering, feasibility and geological studies.
“We want to maintain the momentum in the development of Julia Creek and plan to do this by completing pre-feasibility studies and advancing our knowledge of the most advanced process technologies available, to maximise shareholder value,” QEM director David Fitch said in a statement.
“While QEM’s primary focus is on vanadium, developing this project will give us the distinct advantage of potentially extracting two product lines from a single resource base, once we have completed more work to establish this possibility.”
The IPO prospectus points out that QEM is a very new company and says “the entity’s ability to continue as a going concern is dependent on the success of the Public Offer”.
Revenue consists of interest and grants. A cashflow statement for the six months to December 2017 shows $15,124 cash in the kitty.
It owes $1 million via convertible notes, which will convert into equity at the IPO.
The last note was for $440,000 to the IPO lead manager Vested Equities in May, and will convert into 10 million shares.
And in April the company raised $1 million from convertible notes which will convert into 10 million ordinary shares upon listing.
The offer opens on August 14 and runs to September 10. QEM hopes to be listed by September 20.
>> Here’s a list of upcoming ASX IPOs: