Aura investors on board with vanadium push after $3.7m capital raising
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Aura Energy has closed its latest capital raising significantly oversubscribed ahead of the spin-out of its Swedish vanadium project.
Investor appetite for vanadium stocks is growing due to the fact it is classed as a battery metal.
About 90 per cent of global vanadium production is used to make high-strength steel, but future demand stems from its role in vanadium redox flow batteries, which can store more power and discharge it over a much longer period than lithium-ion batteries.
The price of vanadium has rocketed 550 per cent in the past three years, outpacing other commodities – including its battery metal counterparts, cobalt and lithium.
Aura (ASX:AEE) has raised $3.7 million — $1.6 million more than it was targeting — to advance its Haggan vanadium project in Sweden prior to the planned demerger of the asset into a new company that will be listed on an international exchange.
The capital raising received strong support, particularly from overseas investors, executive chairman Peter Reeve told Stockhead.
“Because the vanadium price has started to rise, the project has really morphed from a polymetallic into a battery metals project and now significant value of the project is in battery metals,” Mr Reeve said.
“It’s a larger project and therefore it needs its own emphasis, it needs its own management team, it needs its own funding source.”
Besides vanadium, Haggan is also prospective for cobalt, molybdenum, nickel and neodymium – which is used in the manufacture of high-strength permanent magnets.
Aura has a market cap of just $18 million and Mr Reeve believes the value of the Haggan project is not currently being reflected in the company’s share price – which is around 2.1c.
“For me the encapsulation of why we’re doing the IPO is to give it a life and realise properly its value,” he said.
Aura, which is currently listed on the ASX and London’s AIM Exchange, is considering either an AIM or TSX Venture Exchange listing along with a secondary listing on Sweden’s stock exchange.
“We will list it separately but retain 70 or 80 per cent ownership in the early stages,” Mr Reeve said.
“We’ll remain obviously a significant shareholder and as value accrues over time we will obviously release and sell down.
“It’s just a way to really give a lot of value to Aura shareholders over a long period of time for how valuable the project could be.”
Peak Asset Management will be advising Aura on the demerger and expects to have it completed by the third quarter of this year.
“Management are committed to adding more value to the vanadium project so when they do spin it out obviously they can get a nice price for it,” Richard Rouse, head of business and strategic development for Peak Asset Management, told Stockhead.
“That should add a tremendous amount of value to the share price.”