Accelerate Resources launches $5m IPO to ride the cobalt wave

Accelerate Resources will soon invite investors to take part in a $5 million initial public offering to fund exploration for cobalt, copper and gold.

“The lead project is the [Mt Read] cobalt project in Tasmania, which has just come into the exploration season,” boss Yaxi Zhan told Stockhead.

“It’s driven by the demand of cobalt and lithium, the battery-related minerals. So it would be a good time for Accelerate to basically catch the wave and get the company listed.”

The battery industry is seeing unprecedented demand as electric vehicle manufacturers move to displace the grip the internal combustion engine has over the automotive industry.

Electric cars will account for 2 per cent of the market by 2020, rising to 8 per cent by 2025 and 20 per cent by 2030, predicts Bloomberg New Energy Finance.

Demand for electric car batteries is expected to drive demand for cobalt eight-fold by 2025, according to Morgan Stanley.

‘Strong interest’

Even before Accelerate filed its prospectus with the Australian Securities and Investments Commission last week, the company was witnessing “strong interest” from brokers and people in the industry, Ms Zhan said.

“They’re basically interested because number one is that the cobalt project is actually in Australia and it also has a potential high grade,” she said.

“When people are looking for secure and ethical cobalt obviously Australia, and Canada is another country that is a lot higher ranked than the African countries for cobalt demand.”

The Democratic Republic of the Congo hosts around half of the world’s cobalt, but the African nation has been in the spotlight for some time over ethical issues surrounding the mining of the commodity.

Accelerate also has four Western Australian gold projects in its portfolio after it struck a deal with POZ Minerals in May to acquire the Mt Monger and Bulgera projects.

In the Pilbara, the company recently applied for an exploration licence that is believed to host units of the Hardey Formation.

Sedimentary units of the Hardey Formation are thought to be prospective for conglomerate hosted gold mineralisation.

This style of mineralisation came into favour in July when Canada’s Novo Resources and ASX-listed partner Artemis Resources announced a gold nugget find at their Purdy’s Reward site near Karratha in Western Australia.

Accelerate plans to issue up to 25 million shares at 20c each to complete its IPO. If all goes to plan, the company expects to hit the boards of the ASX by January 29, trading under the ticker AX8.

The offer is due to open December 8.