Slovakia the hot new destination as gold and silver explorer looks to IPO

Slovakia, a former communist country prior to its peaceful split with Czechoslovakia back in the early 90s, is carving out a name as an attractive mining destination.

One soon-to-be-listed gold and silver explorer, Prospech, is hoping to strike it rich in the landlocked country.

Prospech’s initial public offering is due to close August 25 with an ASX listing tipped for later this quarter.

The company is trying to raise $5 million through the issue of 25 million shares at a 20c issue price and 12.5 million attaching loyalty options. There is a provision to raise a further $2.5 million.

After the IPO, the company will have 98.3 million shares on issue, market cap of about $19.7 million and enterprise value of $12.3 million.

Prospech’s board has been on the road recently, spruiking its prospectus to analysts and brokers. While feedback was generally positive, Mr Beckton said the market was still challenging.

“It’s quite a tight market and the market demands quality,” he said.

“It’s fine, we will fill (the IPO). This thing should sell itself, however you have to explain the whole Europe piece and that you are not starting a mine out the back of Paris or something.

“But the IPO should fill itself very soon.”

Untapped gold and silver?

Established in 1993 after Czechoslovakia split into two countries, Slovakia is an advanced economy with one of the faster growth rates in the European Union and OECD with a population of 5.5 million and land area of 48,000 sq km.

The country, which joined the European Union in 2004 and the Eurozone in 2009, is often called the Central European Tiger or Tatra Tiger and is considered an attractive destination for foreign investment with a 20 per cent flat rate tax and stable economy.

While not a world-leader in mineral wealth, Slovakia does have natural resources, in particular brown coal, lignite, iron ore and copper.

In the communist era, the primary focus was mining base metals such as copper. But Sydney-based Prospech believes Slovakia has significant untapped gold and silver that remain untouched.

Prospech owns multiple known gold and silver epithermal deposits in three exploration licences with its principal focus on the Hodrusa-Hamre and Nova Bana projects.

Location of Prospech’s gold and silver projects in Slovakia. Picture Prospech

The Hodrusa-Hamre exploration licence lies 200 km east of Vienna and covers the majority of the historic Hodrusa-Hamre/Banska Stiavnica mining district in the caldera of the Neogene Stiavnica Stratovolcano. It hosts some 120 epithermal veins — with major veins reaching a length of 8 km.

The Nova Bana and Rudno licences 15 km west of Hodrusa-Hamre, cover an epithermal gold system with veining known to extend over an area of 3.8 km by 1.6 km.

The town of Banska Stiavnica in winter. Picture: Prospech

Forward work program

After listing, Prospech will undertake further exploration on its licence areas.

The company warns in its prospectus that it “does not expect to generate any revenue in the near future”.

However based on more than a millennia of mining activity and recent exploration encouragement, Prospech believes the exploration licences have a multi-million ounce target potential.

The company has identified an exploration target of 2.8 to 6.8 million ounces of gold and 81 to 290 million ounces of silver based on historic production, drill tests and surface sampling.

Prospech hopes to add to this target once it undertakes further exploration on its tenements.

The company’s main aim is to start work on the Schopfer Vein system which is one of the biggest structures at Hodrusa-Hamre and a significant historical producer of gold and silver.

“We will start drilling in Schopfer and it’s going to be a resource,” Prospech managing director Jason Beckton said.

“We have already got a model and we’ve got underground drilling completed and a bunch of historic grade information which we have spatially arranged in 3D. So with those three things combined you start to get towards inferred status. But what finishes it off and gets it to inferred status is surface drilling.

“We have done some underground drill holes that go 10 to 15 metres and that’s great because we have drill-tested an area of Schopfer that averaged 2 grams per tonne of gold and 200 grams per tonne of silver.”

Prospech’s board boasts a wealth of experience. Chairman Thomas Mann was previously non-executive chairman of ASX-listed Aeon Metals and has 30 years experience in financial market. Mr Beckton is a professional geologist with 20 years experience in exploration, project development, production and management in Australia and internationally.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.