Emerging metals potential guides companies to ASX listings

The Goongarrie site at the Kalgoorlie Nickel Project.

Listing on the Australian Securities Exchange (ASX) was a difficult task for junior mining companies following the downturn in commodity prices earlier this decade.

Due to the challenging market conditions investors were reluctant to fund mining companies and instead pursued better-performing sectors like technology.

However, with a cautious optimism emerging in the mining industry since the second half of 2016, prospects for fledgling companies seeking to list to raise funds for project development have improved.

One company that successfully listed on the ASX in February was Ardea Resources, which is led by managing director Matt Painter.

Ardea, a spin-out of Heron Resources, is focused on developing the cobalt potential at its 100 per cent owned Kalgoorlie Nickel Project (KNP) in Western Australia, as well as the Lewis Ponds zinc-gold project in New South Wales.

KNP is regarded as the largest cobalt resource documented for an ASX-listed Australian mineral explorer. And with cobalt becoming one of the world’s most sought-after commodities it made Ardea the type of company that could effectively seek a listing in the current environment.

Painter told Australian Mining the emergence of tech-metals, such as lithium, cobalt and vanadium, was driving the next breed of companies seeking to list on the ASX.

“There has been a realisation in the marketplace that the battery-related metals are going to be vitally important and there is going to be a shortfall of them,” Painter said

“Certainty we have seen that with lithium already, we have seen it to an extent with graphite, we are starting to see it with cobalt now.”

Data on the ASX at the end of first quarter 2017 shows this assessment is spot on. Amongst the companies that listed during this period were lithium hopefuls MetalsTech, Lithium Consolidated Mineral Exploration, Matador Mining and Marquee Resources

Joining Ardea as a company that listed with plans to develop cobalt prosects was Cobalt Blue Holdings.

“With the focus on these metals it has become quite clear that places like Western Australia have an endowment of most of the minerals,” Painter continued.

“It is something that people can see is coming and it is helping to develop a bit of optimism in the sector as well. The amount of lithium prospects in WA is phenomenal. As it turns out we have quite a bit of cobalt as well and we are happy to say it is ours.”

While Ardea may have fallen short of its $6 million target at IPO, by raising $5.1 million, Painter believes the company is well placed to fund its upcoming activities.

He said, importantly, the funding would allow the company to advance development of the cobalt zone at KNP.

“We are standing on the shoulders of giants there – we’ve had Vale Inco and Heron in there, they’ve done extensive studies on it before and their data is magnificent,” Painter explained.

“We can now move on that and refocus on their data from various viewpoints to allow us to get a pre-feasibility study out for a very small budget.”

Despite volatility in the marketplace, Painter believes the company attributes that have always led to a successful IPO remain the same today: quality projects and a clear focus on how they will be developed.

For Ardea, the quality of the KNP and Lewis Ponds projects was always there. However, Painter conceded that the company did switch its focus midway through the process after realising the potential of KNP’s cobalt resource, in addition to it being a nickel prospect.

“Cleary our focus did shift somewhat. But certainly, it became clear that when we did define our focus with the cobalt then things started to lift – assuming you have a good quality set of projects you are going to get there,” Painter concluded.

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