Mining floats will take a hit after market shakedown
Explorers with a stockmarket float in their sights will need to differentiate themselves following the market meltdown, writes Barry FitzGerald in his Garimpeiro column
The rush of mineral exploration floats is set to be severely checked by the sharemarket’s recent shakedown.
While commodity prices have not been hit as hard as equity values, sentiment towards exploration floats has nevertheless taken a turn for the worst.
It means that many of the floats currently being spruiked will have to be parked, up-ending confirmation that Wall Street’s sharp sell-off last week was a passing technical correction.
Those floats that do see the light of day during the market’s bout of nervousness will have differentiated themselves from the rest of the pack.
Woomera Mining (ASX:WML) is an example. During last week’s sharemarket maelstrom WML said it had raised its minimum subscription of $4 million and intended closing books on its $4 million to $7 million initial public offering as planned on February 15.
In what is a recapitalisation and rejuvenation of the ASX-listed Ausroc Metal — which has been suspended for more than three years — shares in WML (112.2 million shares at the minimum subscription of $4 million) are expected to re-list on March 1.
Like all exploration floats looking to attract investor interest, WML’s comes to the market sporting tenements in South Australia and Western Australia prospective for the all of the buzz metals — copper, nickel, lithium, cobalt and gold.
That WML has been able to see off the sharemarket turmoil with “firm’’ commitments for its $4 million minimum subscription (it will be chasing so-called soft interest for another $2 million in coming days) comes down to two key selling points.
The first is a farm-in agreement with OZ Minerals covering its nickel and copper tenements in the Eastern Musgrave province in far northern SA.
The second is WML’s Gawler Craton gold and copper tenement package on SA’s Woomera rocket range.
New frontiers in a crowded exploration scene
There is a common theme between the two in that both represent new frontiers in Australia’s otherwise crowded exploration scene.
In the case of the Eastern Musgrave, it’s due to the region’s absolute remoteness — hard up against the border with the Northern Territory, albeit with WNL’s ground split by the Stuart Highway.
In the case of the Gawler Craton, access to the prospective ground WML has secured has only been possible since 2011 when the Federal government eased access restrictions for explorers to the large swathe of SA covered by the Woomera rocket range.
WML’s float cause was boosted late last month when OZ Minerals felt its exploration joint venture with WML in the Eastern Musgrave was sufficiently worthy for it to make its own ASX announcement on the project area.
WML backers — Ausroc is acquiring their unlisted Woomera Exploration Ltd — were first movers in the Eastern Musgrave after access restrictions to the rocket range were eased, picking up some plum ground which has been worked up in to walk-up nickel and copper drill targets in the joint venture with OZ.
Seven shallow targets
Under its agreement with WML, OZ has committed to drilling seven shallow targets for magmatic nickel-copper sulphide systems similar to the Nebo Babel deposits, 500km to the west in Western Australia’s portion of the Musgrave province.
OZ and its partner at Nebo Babel, ASX-listed Cassini Resources, recently committed to a pre-feasibility study in to a possible $730 million to $800 million mine development capable of producing 25,000 tonnes of nickel, 30,000 tonnes of copper, and 1000 tonnes of high-value cobalt annually.
In the joint venture with WML, OZ Minerals can elect to earn a 51 per cent equity in the project after drilling the first seven holes by spending a total spend of $2.5 million on exploration within 18 months.
An additional $5 million on additional exploration would increase OZ’s stake to 75 per cent.
On its Woomera rocket range ground WML has three main areas of interest – the Carulinia and Nawa Domain iron oxide copper gold projects and the Labyrinth copper nickel project.
They are generally within the “periodic use’’ and “infrequent use’’ zones of the rocket range as distinct from the “continuous use’’ requirements of the Defence Department.