GWR has $37.5m cash to splash on a great asset. Source: Getty Images.
GWR is cashed up and on the hunt for a game changer project
Mining
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- Few juniors have more than $10m cash, GWR has $37.5m
- Company on the hunt for a game-changing project
- Futura Capital’s Matthew Pedley called in to find a critical minerals asset
It’s rare that a junior has more than, say, $10m in the bank at any one time. In fact, according to BDO’s latest Explorer Quarterly Cash Update for the September 2024 quarter, junior resources companies had an average cash balance of $9.5 million, a two-year low.
And around half of those ASX resources juniors were sitting on less than $2m.
It is even rarer for an explorer to sell a project and hold onto those funds until it finds something really, really worth splashing some cash on.
On notable member of that cohort is GWR Group (ASX:GWR) which has been sitting on a nice cash pile since selling its Wiluna West iron ore project last year for $30 million plus a royalty.
The company then sold its 80% interest in the Hatches Creek tungsten project for $8.6 million worth of shares in Tungsten Mining (ASX:TGN).
TGN owns several tungsten projects around Australia, a mineral crucial for munitions and manufacturing – and with supply of around 80% of the world’s tungsten controlled by China – having exposure to domestic supply of the critical metal is another string in GWR’s bow.
The company is also advancing its own 70%-owned Prospect Ridge magnesite project in Tasmania, which it holds in a joint venture with Dynamic Metals (ASX:DYM).
At the end of December GWR had $37.3 million in cash in the bank, with a nice slice from Wiluna iron ore and Duke gold royalties bolstering the bank balance – and a further $14.3 million in listed securities.
Now, the hunt is on for project acquisitions that complement Prospect Ridge, with a particular focus on critical minerals.
Looking for the “game-changer”
Chairman Gary Lyons said the company appointed Futura Capital founder Matthew Pedley to guide them to find a ‘game changer’ project.
“His brief was to evaluate advanced projects that were in or close to a production phase,” he said.
“The commodity focus was quite broad and included critical minerals particularly those applicable to advanced industrial applications, together with iron ore, gold and copper.”
They certainly have high hopes for Pedley, who’s completed numerous M&A transactions (on both sides of the table) over his career, including raising capital and listing companies on the ASX, LSE and AIM.
Prior to Futura, Pedley worked at Denham Capital, one of the world’s largest natural resources focused private equity firms and was national director of KPMG’s Australian mining M&A team, where he focused exclusively on executing transactions and providing corporate advisory services to the metals and mining industry.
Due diligence is key
In nine months, GWR has run the ruler over a whopping 40-odd projects of which the majority did not pass ‘the sniff test’.
“We are currently conducting due diligence on two of them,” Lyons said.
“We worked tirelessly to achieve the cash position we are in and we will not give it up lightly.
“The next acquisition must be a game changer for our patient shareholder base.”
On that front, Lyons is confident the company will find the right project and is not in a rush to make a decision.
“We ask shareholders to remain patient,” he said.
“The net tangible asset value of the company is significantly greater than the company’s current market capitalisation.
“The board is committed to finding a suitable target in the coming months, however, we will not rush into an acquisition to appease anyone.
“We have one executive and a small board of directors who have worked tirelessly to achieve our cash position and we won’t let it go easily!”
At Stockhead, we tell is like it is. While GWR Group is a Stockhead advertiser, it did not pay for this article.
