The ins and outs of dual listing, starring Hot Chili and Atlantic Lithium

Dual-listing a company provides extra exposure to investors across different markets and can help buoy against the ructions that affect them.

We Stockheads (special shout out to our very own Jessica Cummins, too) spoke to Hot Chili (ASX:HCH) MD Christian Easterday and Atlantic Lithium (ASX:A11) finance director Amanda Harsas who gave us their perspectives on dual-listing across exchanges and how it relates to their company strategies.

Hot copper in the Americas

HCH – and others looking for the Red Metal – have endured a pretty weak equity market these past couple of years, but the good news is that coin has flipped for it to become one of the best performers lately and upside demand sees copper looking strong once more.

Last Friday, the London Metals Exchange reported ~115,500t of copper in its inventories – a stark decrease from 11 years ago when it had at any given time about 600,000t as demand back then was substantially lower.

HCH is now listed on both the ASX and Canada’s TSX-V, which Easterday says gives them market exposure to investors in the Americas because of the market vicinity to its large-scale Costa Fuego copper-gold development in Chile.

Easterday says Canadian and US markets are very familiar with Latin American projects – particularly large-scale copper equities.

“The ASX is not known for supporting large-scale copper developers as was seen in the last cycle and is evident in this current cycle,” Easterday says.

“Our strategy to expand into the North American capital markets is a long-term approach to fund Costa Fuego into a globally significant new copper mine.

“We are following a similar strategy employed by Equinox with its Lumwana copper development in the last copper cycle and have attracted a very high-quality register of investors in Australia which we hope to now add to our North American listings.”

ASX vs TSX-V

Being listed in two major mining jurisdictions has inherent advantages, Easterday says, yet he does see variability between the machinations of the two exchanges.

“We do see a difference in appetite between the two exchanges, and this is reflected in a distinct valuation arbitrage for large-scale copper equities.

“Currently the TSX and TSXV large-scale copper equities trade at 2 to 3 times multiples above their ASX counterparts.

“When it comes to lithium, however, the ASX has valued lithium equities at similar multiples higher than those of the TSX and TSXV.

“Valuation arbitrage between different security exchanges is not a new concept and is primarily associated with familiarity of investors with particular market segments.”

Easterday says that at this stage more than 90% of the company’s liquidity is on the ASX, therefore HCH’s valuation is determined in Australia – although he expects that to change in the years to come.

“We are very pleased, however, to see an increasing level of buying from North American investors through our ASX listing,” Easterday says.

“We are developing long-term relationships well in advance of required project financing to build Costa Fuego into one of the world’s next +100ktpa copper mines and our recent non-dilutive funding from Osisko Gold Royalties of Canada was a direct outcome of our pivot toward North America.

“At this stage, I consider our dual-listing as a beachhead into North American capital markets.”

From AIM to ASX

A11’s Harsas says her company first listed on AIM in the UK because, at the time, investors in that bourse understood the assets Atlantic held as they were operating in Africa and it was a better market to get cash and raise capital.

That all changed when lithium started running hot.

“As time went on, lithium became the thing for WA – and the ASX really – in terms of buoyancy around available capital as the region became more well known for the lithium space,” Harsas says.

“Add to that, because we’re an Australian company, we have a lot of long-term Aussie shareholders, so it was always on the cards that we could come back to effectively our primary market.”

In December last year, Atlantic raised $8m to further exploration at its Ewoyaa lithium project in Ghana and saw investors on the register were predominantly coming through its ASX listing.

“The majority of the shares went into the Australian market because they were the available buyers in our capital raise, so in terms of the ability to get cash, Australia is the better option for us,” Harsas says.

“In terms of the inherent advantage, it’s really about the asset you have and where the funds are.

“At the moment the ASX for lithium is the one that works. It helps with liquidity and helps with your ability to raise capital in that market.

“That works across the board. Where you have a North American asset, there’s an advantage to being in the US – the geopolitical climate and feeling comes into it with the Inflation Reduction Act and things like that.

“For us, the ASX is the right play – we have a lot of long-term holders in Atlantic who believe in the story and love the asset.”

Harsas says that while Atlantic’s liquidity isn’t super-high, what the ASX does for the company is provide the ability to counterbalance economic conditions.

“When the ASX has a booming day, we might not boom as much but we will go up. Equally, when there’s maybe a down day on the ASX, we won’t go down as much because the liquidity in the UK is holding us up slightly,” Harsas says.

“In that sense, it does provide a countermeasure, but also give us access and visibility to more investors.”

Why also stick to AIM?

“AIM has traditionally been a space where there are a lot more junior companies and I suppose the rules are not as intense as some other jurisdictions,” Harsas notes.

ASX listing rules that public companies are obligated to comply with are known to be more stringent. However, the AIM market has a significant amount of cash available through private wealth networks in the UK and Europe that will utilise that market.

“We’re probably up there with one of the leading bunch of AIM companies in terms of our asset and what we’re doing in mining,” Harsas says.

“When you’re a junior explorer and you’re just starting out, the AIM market works well because it has fewer restrictions.

“It’s when you get more solid and you have a project that’s moving forward through the studies that you may then want to go into a different market that is more stringent around your code – those kinds of requirements actually improve your shareholder base.

“It really comes down to the assets you have and the markets that work for that asset – both the where it is and the what it is – especially in the exploration space.”

Developing Ewoyaa

A11’s Ewoyaa lithium project in Ghana is developing at pace. Drilling in late 2023 delivered impressive high-grade near-surface intersections such as 69m at 1.25% Li2O from 45m, showing the growth potential of the current 35.3Mt resource estimate.

The explorer is on the cusp of the development stage after completing a DFS and obtaining an all-important mining lease.

“We’re in the final stages of getting our EPA approvals and once we have that and the mining lease is ratified from parliament, which all happened this quarter, then we can move to break ground in the second half of the year,” Harsas says.

“It’s the fifth biggest gold mining jurisdiction globally. And the biggest in Africa. They’re very comfortable with mining, they understand it and they really want you to build the mine.”

At Stockhead we tell it like it is. While Hot Chili is a Stockhead advertiser, it did not sponsor this article.