IPO Watch: The exploration IPO market begins to tick. Ever. So. Slightly.

They’ve been few and far between, but a handful of explorers are seeking IPOs to list on the ASX in 2024
A Brazilian rare earths explorer with Thorney and Chris Judd in its corner is one of them
So is a Guinean gold hopeful down the road from a major AngloGold operation

New explorers are slowly crawling onto the ASX in a shift that could provide hope for a revival in the ASX’s small cap resources space.

After a massive 104 companies floated on the local bourse to hunt for lithium, gold, uranium and anything else that glowed in 2021, the magpies that flocked to the shiny stuff amid the post-Covid boom migrated to tech as war, rate rises and inflation hammered confidence in diggers.

But capital looks like it is beginning to flow again, albeit at a trickle, with a host of explorers seeking chunky raisings to debut in the weeks and months ahead.

They’ll be hoping to outshine Piche Resources (ASX:PR2), which landed on the ASX with a calamitous thud yesterday.

Gus Simpson’s gold and uranium explorer was down 20% on its first trading day after a $10 million, 20c Euroz Hartleys raise, promising drilling at its Ashburton uranium project in WA as well as the Sierra Cuadrada and Cerro Chacon gold projects in Argentina.

That said, Don Bradman finished with 18 and 1 in his first test en route to almost 7000 runs at an average of 99.94, so it’s important not to get too hung up on debut performances.

On the horizon this week is Ordell Minerals (ASX:ORD), a spinoff of sorts from Genesis Minerals (ASX:GMD) that includes the players who built the WA gold explorer before its transformation under former Saracen and Northern Star boss Raleigh Finlayson.

And further down the line are at least two more exploration plays, one chasing rare earths in the global hotspot of Brazil’s Minas Gerais, and another looking to become the next African gold success story to grace the ASX.

Spinning on the Axel

Axel REE (ASX:AXL) has raised $13 million from institutional investors and another $300,000 in a retail component to satisfy the requirements of listing on the ASX.

Once that is complete it will become the latest in the increasingly busy Brazilian rare earths space to head to the Australian bourse, following the footsteps of trendsetter Meteoric Resources (ASX:MEI), the owner of the super high grade Caldeira ionic clay deposit, Viridis Mining and Minerals (ASX:VMM), the second highest gainer on a percentage basis among ASX resources stocks in FY24, Gina Rinehart backed Brazilian Rare Earths (ASX:BRE), Brazilian Critical Minerals (ASX:BCM), Resouro Strategic Metals (ASX:RAU) and Equinox Resources (ASX:EQN).

Founded privately by a group of investors coordinated by Pat Volpe, a non-executive director at SI6 Metals whose company Foxfire Metals has also JV’d on a rare earths project in Brazil with the Botswana explorer, Axel boasts two projects in Minas Gerais and two earlier stage prospects in other states of the South American mining powerhouse.

Among its early institutional backers are Alex Waislitz’s Thorney Investments and the Cerutty Macro Fund, which is led by two-time Brownlow Medallist and now Melbourne fund manager Chris Judd.

Non-executive chairman Paul Dickson said Volpe and his investors had been looking for iron ore and then lithium in Brazil’s literal mining state, home to Vale’s mammoth iron ore deposits, before accumulating ground that has all the hallmarks of the clay-hosted rare earths being uncovered by Meteoric and its peers.

“They raised capital in October last year as a private entity through Bell Potter and Canaccord, they raised circa $1.2 million and they drilled 48 holes in one of their main projects, Caladao,” Dickson told Stockhead.

“The vast majority of 48 holes drilled over a 25km strike were mineralised and some of the intersections were up to 7600ppm TREO.

“Of that, there was quite a large number that had the correct magnetic rare earths.”

By that, he means neodymium and praseodymium, light rare earths valued for their use in the permanent magnets essential to electric vehicle motors, aircons and wind turbines.

“The ratio of the NdPr was up to 35%, so that compares very favourably to the Meteorics and the Viridises of the world,” Dickson added. Caladao is likely to see around 20,000m of drilling to outline a maiden resource post-IPO.

The skinny on Brazilian rare earths deposits is they just may have the grade to compete with similar mines in southern China, where ionic clays are the dominant source of the metals and which, while lower in grade, enjoy cheaper processing costs than hard rock mines like the Lynas (ASX:LYC) owned Mt Weld in WA because nature has already done much of the work to liberate the metal from the ore.

Dickson, also the chair of Aussie uranium hunter Alligator Energy (ASX:AGE), says Axel has a similar prospect ready to drill adjacent to Caldeira called Caldas as well as another called Itiquira, which is an altogether different prospect.

“Itiquira could equally be niobium,” Dickson said. “There are other structures in Brazil that are like it that have niobium mines.”

An alkaline complex, Dickson said the plan there will be to begin soil sampling in a bid to understand the geochemistry of what is presenting as a 25km wide prospect.

Chasing African gold

Further on the horizon is Siguiri Gold Corp, which is opening its IPO in July. Boasting tenements just down the road from AngloGold’s 220,000ozpa Siguiri gold mine in Guinea, the upstart African gold explorer is chasing $8-10m through lead manager CPS Capital by early August.

Its board is led by executive chairman Michael Minosora, whose long history in the resources industry includes a period as CFO in the hothouse of early Fortescue (ASX:FMG) alongside Andrew Forrest, as well as a stint in Guinea building a major bauxite export operation.

Siguiri is chasing the sort of shallow, oxide hosted gold typical of virgin West African deposits, a characteristic that typically makes them easier to mine and generate cash flow in the early days than the deeper fresh rock and sulphide deposits found in more mature gold jurisdictions like WA.

The company was originally formed by COO Dan James and executive director Michael Mulvey, who boast a long history of operating in the Guinean business world.

Minosora said Siguiri planned to use $1.4 million from the raising to purchase its own diamond drill rig ahead of a 30-40,000m drilling blitz to take the junior to a maiden resource stage.

Around $9m has already been spent on the ground dating back to 2020, incorporating 33,000m of drilling and the location of the project in relation to the SAG mine was a key attraction for the company.

“The history of these particular permits is that back in the 1960s, there was some exploration done on it by a Russian group,” he said.

“We really don’t know much more detail than that on these permits but what brought the company to this area was, first and foremost, the SAG mine being next door.

“Next, there’s quite a lot of artisanal workers historically and to some extent today, working on the areas and the artisanals are people from the local villages that are looking for gold.

“It’s a pretty cool way of doing sampling by just seeing what the locals do.”

Like all African explorers, once it hits the market the company could potentially face what has been infamously dubbed the African Discount, which sees resources of the same scale as other jurisdictions trade at a lower valuation because of the jurisdictional risk Western investors see in West Africa.

Minosora said it was important not to view Africa as a single country, noting that Guinea had proven more predictable than neighbouring jurisdictions like Mali and Burkina Faso.

All eyes are currently on the country’s resources scene, with one of the continent’s biggest recent gold discoveries being made by ASX-listed Predictive Discovery (ASX:PDI) at the 5Moz Bankan project, and Rio Tinto (ASX:RIO) currently negotiating with the Guinean Government and multiple Chinese partners to develop the transformative Simandou iron ore mine.

“I think over time, people will start accepting that not all countries in Africa are the same, and you can’t have one blanket discount to deal with it,” Minosora said.

“A couple of companies that are focused in Guinea, include Predictive Discovery and Robex Resources, which is a Canadian-listed company – both raised in the maybe two month pretty substantial money.

“Robex closed an offer for C$126 million maybe a month ago. They went out for C$50 million and came back with C$126 million.

“Predictive has raised two tranches in the last nine months from memory, and they did $50 million in May and they did $40 million last October. So the market’s definitely got an appetite for quality gold assets in Guinea.”

The hunt for a discovery near Siguiri comes at an interesting time, with cheaper oxide material for the 26 year old mine being displaced by harder transitional and fresh ore and all in sustaining costs rising to the vicinity of US$2000/oz.

A major oxide discovery at Siguiri Gold’s ground would likely be of interest to the South African giant, and a number of small ASX explorers operating in West Africa have been taken out at a premium over the past decade, the latest Tietto Minerals.

But Siguiri’s ambition is to outline a larger gold resource in the order of 2Moz that could justify a project of the scale of 200,000ozpa or above, similar in nature to Tietto’s Abujar in Cote d’Ivoire or the Sanbrado mine, which made West African Resources (ASX:WAF).