Australian quality copper cathode producing company with advanced exploration tenements

OnMarket Bidding Closed Austral Resources Australia Ltd ASX: AR1

Austral Resources Australia Ltd | ASX: AR1

Fixed Priced IPOType of Offer
12 Oct 21Offer Open
15 Oct 21Pay By
$0.20Price
$30 millionSize of Offer
$2,000 Minimum Investment
Peloton CapitalLead Manager

The company has confirmed the offer is covered at the minimum IPO raise of $30 million
 

All payments to be submitted by Friday 5:00pm (AEDT) 15 October 2021

Highlights

Introduction

Austral Resources Australia Ltd (ASX: AR1) is a quality copper producing company that owns an operating copper oxide ore processing facility. It is developing a new open pit copper mine and also has 1,340 km2 of highly prospective exploration tenements near Mount Isa, northwest Queensland. Some of these tenements have advanced exploration status. The Company is already producing copper with significant Ore Reserves in the Anthill project only 45 kilometres away from the Mt Kelly processing facility.

The Company’s sales contracts are in place and the price for copper has a positive outlook, based on analyst reports and underlying copper demand building from the global push towards decarbonisation – renewable energy and electric vehicles.

Austral currently has a portfolio of over 49 copper targets within its exploration tenure. These have been ranked for prospectivity and assigned work plans and budgets. Work is scheduled to begin in Q4 2021.

Austral Resources and Thiess have entered into a Letter of Intent for Thiess to conduct mining services and earthworks on AR1’s new open pit copper mine. AR1  anticipates finalising negotiation and entry into a final binding contract with Thiess on or before the 31st of this month.

Terms of the Offer

Austral Resources Australia Ltd is looking to undertake an IPO on ASX to raise $13 million via the issue of between 150 million shares under the Offer at an offer price of $0.20.  The company will have an indicative market capitalisation of approximately $89.08 million on a fully diluted basis on completion of the offer. 

Industry Overview

Copper

Copper is the largest globally traded base metal with 24.9Mt of refined copper demand in 2020, valued in excess of US$150 in renewable energy.  The copper price increased from an average price of US$6,000/t in 2019 to in excess of US$10,000/t in the first half of 2021.

Demand for copper in renewable energy is projected to increase by ~600% to 5.4Mt and 900% to 8.7Mt in  the case of hyper adoption of green technologies and as world industrial production begins to resume to previous levels as the global pandemic is brought under control.

Copper supply is met by mine production and scrap recycling. South America, Chile and Peru provide approximately 40% of mined production. A significant pipeline of existing and new mine expansions are underway to replace ageing assets.

Decarbonisation and Electric Vehicles (EV)

Traditionally, copper demand hinges on its traditional end-use suite: construction, power, industrial equipment, automotive use and consumer end-goods and electronics.

The focus on developing a greener global economy (decarbonisation) is causing a shift away from fossil fuels to renewable energy electrification and a subsequent increase in demand for copper as electrification requires new metal intensive infrastructure.

The push towards electric vehicles – both hybrid and Battery Electric Vehicles (BEVs) – is gaining momentum with major car manufacturers such as Mercedes Benz announcing their intention to fully convert to electric car manufacture by 2030. The significance of this is that conventional cars contain approximately 20kg of copper per vehicle, hybrid/plug-in hybrid vehicles contain 40-60kg copper and BEVs contain 80kg copper. Adding the charging infrastructure required for BEVs could add another 20kg per vehicle.

Company Overview

The Assets

Austral owns the following key assets:

  • The Mount Kelly heap leach Solvent Extract and Electrowinning (SX/EW) processing facility (Mt Kelly). It produces LME Grade A copper cathode (99.99% copper metal) and is located 120km north of Mount Isa in Northwest Queensland.
  • The Anthill Project. An undeveloped, fully permitted, open-cut mine with a JORC Ore Reserve of 5.06Mt @ 0.94% Cu or 47.5kt of contained copper in oxide ore. The Anthill Project is strategically located 45km by bitumen road from Mt Kelly.
  • Exploration tenements. A highly prospective 1,340km2 exploration tenure portfolio with a global JORC compliant Mineral Resource Estimate of 60Mt @ 0.70% Cu, or 423kt of contained copper.

Mt Kelly Processing Facility

Mt Kelly was historically referred to as Lady Annie Operations. It was constructed in 2007 by Ausenco for CopperCo as a 2.6Mtpa oxide ore heap leach facility with a SX/EW circuit capable of producing 19,000tpa of copper cathode. The Facility was modified over the years to a nominal design capacity capable of producing 30,000tpa of copper cathode. It produced a maximum of 22,392t of copper cathode in 2012.

Austral benefits from three key features:

  • The Facility is in sound operating condition.
  • Scaling up production is straightforward.
  • The Company has a seasoned operations and processing team onsite.

Austral and its predecessors have successfully produced over 125,000 tonnes of copper cathode since 2007.  

Austral is contracting out the mining, drill and blast, and haulage activities to contractors specialised in their respective areas. The mining method is by conventional truck and shovel (excavator). The mining contractor is responsible for the Anthill Project site preparation, including the construction of a creek diversion prior to commencing overburden removal then mining ore.  The mining and processing procedure is outlined in the image below.

Key Objectives

The Company employs a highly capable technical and management team that will undertake the following activities upon listing on the ASX to maximise return on assets:

  • Manage contract mining of the Anthill Project to provide copper oxide ore feed to Mt Kelly. The Anthill Project has been the subject of internal and external studies over the past two years to provide costing data, optimise mining and crushing, agglomeration and stacking methods. The Anthill Project is fully permitted for development and is capable of providing sufficient ore to produce 40,000t of copper cathode over a four-year period. Mining is scheduled to commence Q4 of 2021 with the first ore expected to be delivered to the leach pads in Q1 2022. Mt Kelly is maintained and in good working condition and has enabled the Company to develop a first-class operations team.
  • Intensive exploration of its tenure to discover additional ore feed for the Mt Kelly facility. The exploration tenure is well endowed with copper containing a 423Kt JORC compliant Inferred and Indicated Mineral Resource Estimate (Section 4.11). Over 49 prospective copper targets have been defined from historic and recent exploration work. Austral is expanding its highly competent exploration team to drive this initiative.
  • A review of sulphide and transitional mineralisation (Mineral Resource Estimate of 324kt of contained Cu, tabled in Section 4.10) for its potential to be economically mined and processed. This provides a compelling case to further explore the potential to develop this mineralisation.
  • A review of other potential ore sources within an economic haulage distance of the Facility.

Growth Strategy

 Austral intends to drive growth by leveraging its free cashflow from its Anthill Project to fund exploration and business development opportunities. The main initiative is to discover/acquire significant oxide resources that can be economically trucked to the Mt Kelly Facility.

Key elements of our growth strategy include the following:

  • Systematic exploration and development of the Company’s key projects.
  • Diversify the current ore feed source beyond the Anthill Project.
  • Utilise best practice to optimise exploration, mining and processing.
  • Utilise modern exploration methods and cost effective programmes to make new discoveries in a copper endowed tenure package.
  • Define further drilling targets within the Company’s tenure through systematic exploration and interpretation of previous results.
  • Advance discoveries to the development stage while also exploring and advancing a pipeline of other projects.
    • Develop oxide resources in the district.
    • Review the potential to commercialise the significant sulphide ore resources.

Business Model

 Austral’s business model has the following key objectives:

  • To list on the ASX which provides a liquid market for existing and new investors, and the ability for Austral to raise funds for future operations and growth opportunities.
  • To commence development of the Anthill Project to produce a projected 10,000tpa of copper cathode metal for four years, commencing Q4 of 2021.
  • To extend Austral’s current four-year mine life by utilising a portion of the cash generated by the Anthill Project to intensively explore over 1,340km2 of highly prospective tenure. The company will review opportunities to joint venture, fund, acquire or toll treat other oxide copper resources within the immediate area and review options to develop Austral’s sulphide copper resources. The company is aiming to be the Company of choice for copper investors and stakeholders.

Board and Management

Austral Resources Australia Ltd is led by a highly competent Board who brings relevant experience and skills including industry and business knowledge, financial management and corporate governance experience. These include:

Phillip Thomas - Chairman

Phillip has been CEO and Chairman of a number of ASX and TSX companies and has a wealth of experience in exploration, mine feasibility and development, operations, minerals trading, corporate strategy and valuation. He has significant trading and investment banking experience having been a senior executive at Macquarie Bank, ABN-Amro, Watson Wyatt and McIntosh Securities.

Phillip has substantial Australian and international mining experience having worked in Chile (copper), Argentina, Peru, Mexico (copper), USA, Canada (copper) and Malaysia. He has a keen understanding of the skills required for the successful development of mining businesses and the teams that run them. He is a strong proponent of “get it right the first time” and developing people to excel in their roles. Phillip’s commodity experience includes copper, gold, iron ore, lithium, and rare earths..

Dan Jauncey – Executive Director

Dan founded Matilda Earthmoving in 2000. This business was based in Toowoomba, Queensland and operated predominately in Southern Queensland and Northern New South Wales. In 2003, Dan saw an opportunity in the resource sector to supply late model, low-hour ancillary equipment on a rental basis. This alleviated a number of industry challenges and, as a result, Matilda Earthmoving was wound down and Matilda Equipment was formed. Over a 15-year period, Dan expanded Matilda Equipment nationally and also established a branch operating in Papua New Guinea. In 2012, Matilda Equipment was recognised as one of the fastest growing companies in the country and was placed in the BRW Fast 100 Companies. In 2018, Matilda Equipment was sold to an ASX listed company.

Dan was instrumental in the acquisition of the key mining assets for Austral Resources in 2019. Since acquisition, he has been involved in all facets of Austral Resources, from day-to-day operations through to capital raising. He takes a holistic, hands-on approach to business, regularly visiting sites and being involved with the team.

Jeff Innes – Non-Executive Director

Jeff is a professional leader with high integrity and demonstrated performance in operations management, strategic planning in mines, feasibilities, mine expansion, and HR restructuring. Jeff possesses a progressive style of leadership, with a strong customer focus and an ability to view the organisation in a global context. His management style involves focusing teams on value adding priorities. His commodity experience includes zinc, silver, lead, iron ore, gold, copper, uranium, and coal.

Jarek Kopias, Company Secretary

Jarek has 25 years' industry experience in a wide range of financial and secretarial roles within the resources industry. This includes 5 years at WMC Resources Limited's Olympic Dam operations, 5 years at Newmont Mining Corporation in the Australian corporate office, and 5 years at Stuart Petroleum Limited, an oil and gas producer and explorer, prior to its merger with Senex Energy Limited.

Jarek is currently the CFO and Company Secretary of Resolution Minerals Ltd (ASX: RML), and Company Secretary of Core Lithium Ltd (ASX: CXO) and Iron Road Ltd (ASX: IRD). He has held similar roles with other ASX entities in the past, and has other business interests with numerous unlisted entities.

Key Offer Statistics

Use of Funds

Funds raised from the Offer will be applied as follows:

For further information on the Key Offer Statistics and Use of Funds, please see the prospectus.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. As set out in Section 5 of the prospectus, Austral Resources Australia Ltd is subject to a range of risks, including but not limited to mine development, operational risk, increase in costs, exploration and evaluation, reserves and resource estimates and contractual risks..

 

Section 734(6) disclosure: The issuer of the securities is Austral Resources Australia Ltd ACN 142 485 470. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Duplicate bids under the same investment profile, investor name or residential address may be cancelled

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Australian quality copper producing company with advanced exploration tenements

 

All payments must be submitted by 5:00pm (AEDT) Friday 15 October 2021

 

Austral Resources Australia Ltd (ASX: AR1) is a quality copper producing company that owns an operating copper oxide ore processing facility. Austral Resources and Thiess have entered into a Letter of Intent for Thiess to conduct mining services and earthworks on AR1’s new open pit copper mine. AR1  anticipates finalising negotiation and entry into a final binding contract with Thiess on or before the 31st of this month.

 

AR1 has 1,340 km2 of highly prospective exploration tenements near Mount Isa, northwest Queensland. The Company is already producing copper with significant Ore Reserves in the Anthill project only 45 kilometres away from the Mt Kelly processing facility.   Austral currently has a portfolio of over 49 copper targets within its exploration tenure. 

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