Kincora hits the ASX as copper comeback continues

Kincora Copper will become a dual listed company this morning when it lights up the ASX boards following a heavily subscribed IPO, with two rigs currently drilling at its brownfield Trundle porphyry project and a pipeline of newsflow.

At the same time, investor appetite for high quality Australian listed copper stocks continues unabated as the price of the red metal climbs.

Kincora Copper (ASX:KCC), which is already listed on Canada’s TSX Venture Exchange, will ring the ASX bell at 11am AEDT today following massive demand for its $10m IPO.

The company, which is led by ex-Goldman Sachs analyst Sam Spring, is currently trading at 26 Australian cents equivalent on the TSX-V, making it a no brainer for investors given the IPO offer price of 20 Australian cents.

On listing, Kincora will have a market capitalisation of only $24.1m and over $12m cash in the bank, very favourably valued to many of its now ASX exploration peers and providing significant leverage to exploration successes.

After initially targeting $8m, the company quickly upped this to $10m and received bids for many multiples of that from recognised local/international specialist resources funds, family offices and retail investors. The IPO also opened and closed earlier than anticipated as a result of such strong demand.

Flood of instos and high net worth investors

Kincora’s current largest shareholder, LIM Advisors — the longest running alternatives manager in Asia — took as much as it could without breaching the 19.9 per cent fully diluted holding level as calculated on the TSX-V.

Existing 7 per cent shareholder, ASX-listed RareX (ASX:REE) — a $52m market cap explorer and joint venture partner for many of Kincora’s NSW projects — took its full pro rata share to maintain its holding in Kincora.

Lowell Resources Fund, one of the best performing specialist resources managers in the country currently, also continued to be supportive of Kincora.

“We are delighted with the extremely strong response from investors which clearly underscores the re-rating potential of Kincora to become the leading pure play explorer in what is Australia’s foremost copper porphyry belt,” chairman Cameron McRae said.

“The transaction was very well supported by a number of our existing shareholders and we welcome new institutional, high net worth and retail investors to this heavily oversubscribed dual listing.

“With the right corporate foundations and a strong balance sheet, the team is very focused and excited about the extensive amount of drilling and other potential value add catalysts ahead of us.”

McRae is a former Rio Tinto (ASX:RIO) operative and was the president of the mining heavyweight’s Oyu Tolgoi mine in Mongolia — one of the largest known copper and gold deposits in the world.

Copper is earning itself the moniker “comeback kid” as a serious deficit of major new discoveries plays out and demand continues to shoot up thanks to huge infrastructure spending by China and the increased uptake of renewable energy and electric vehicles.

After spending the past few years trying to pick itself up from a low of around $US4310 a tonne, the red metal finally got its day in the sun when the price kicked out of reverse and took off in late March/early April last year.

In the past 12 months, copper has jumped 93 per cent. Experts like Goldman Sachs are predicting it will hit $US10,500 a tonne in the next 12 months, while the world’s biggest copper trader, Trafigura, expects the metal to hit $15,000 a tonne in the coming decade as demand from global decarbonisation produces a deep market deficit.

Advanced project in Australia’s leading porphyry belt

Kincora is currently drilling the only brownfield project, Trundle, held by a listed junior in Australia’s foremost porphyry district — the Macquarie Arc in NSW, part of the Lachlan Fold Belt (LFB).

The LFB has become one of Australia’s hottest mining addresses thanks to Alkane Resources’ (ASX:ALK) Boda discovery in September 2019.The region is also host to Newcrest Mining’s (ASX:NCM) giant, low-cost and successfully producing Cadia copper-gold mine, Australia’s largest and most profitable gold mine, and Evolution Mining’s (ASX:EVN) flagship Cowal mine.

Kincora’s technical director John Holliday originated, managed and was the principal discoverer during the exploration phases at Cadia, was a key figure in the Marsden discovery near Cowal and is a foremost expert on the LFB porphyries.

Trundle shares the same mineralised system as the Northparkes mine, which is Australia’s second-largest porphyry mine and hosts 4.5Mt copper and 5.5Moz gold. The first hole at Trundle intersected 51m at 0.54 per cent copper and 1.17 grams per tonne (g/t) gold starting at just 39m.

Kincora’s tenement holdings in the Lachlan Fold Belt. Pic: Supplied.

When it comes to porphyry deposits, size counts.

These multigenerational monsters are responsible for ~60 per cent of the world’s copper, most of its molybdenum, and significant amounts of gold and silver. In the Macquarie Arc these deposits generally host very high copper grades and also high amounts of gold.

Kincora has a district-scale project pipeline and is looking to confirm its position as the leading pure-play porphyry explorer in Australia.

The company plans to drill a minimum of over 17,000m across three projects in the LFB in the next 12 months as part of a much larger 34,000m drilling program.

Unlike many IPOs for exploration juniors, Kincora is already drilling with two rigs currently spinning at Trundle, with assay results expected shortly, and advanced preparations are being made for drilling at the Nyngan and Fairholme projects.

This article was developed in collaboration with Kincora Copper, a Stockhead advertiser at the time of publishing.

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