Highly leveraged battery metals IPO wins backing of big-name mining identities

Bellavista to hits the boards on Wednesday. Plus, PVW ready to put its strong bank balance to work in rare earths hunt and Battery Minerals sees plenty of smoke at gold prospect just 10km from rich Stawell mine
19th May 2022

It is nice to think that amongst all the gloom, a bunch of investors will be having a knees-up at a Perth establishment next Wednesday to celebrate the listing of Bellavista Resources with its proposed ASX code of BVR.

The prospectus for the $6.5m IPO is closed and as a measure of the demand for the 20c shares in the battery metals and uranium explorer in WA’s mid-west, it can be said the IPO was over before it began.

There are a couple of reasons for that – Bellavista’s drill ready targets along a 130km-long corridor in the Edmund Basin south-west of Newman, and as is always the case as to whether junior exploration IPOs fly or not, it’s about the people behind the company.

The Edmund Basin is coming into its own with the development of Galena Mining’s (G1A) Abra lead-silver mine some 30km south of Bellavista’s ground, and the recent move by Canadian big boy Teck to take up a big tenement package about 20km to the north.

As for the people behind the company, two notables of the mining and exploration industry have each taken up 10% licks in Bellavista through the IPO. They are Steve Parsons (who gets to double up on the celebrations next week by marking his 50th birthday) and Mark Clark.

Parsons is the founder and managing director of the now $840m gold developer Bellevue (BGL) while Clark is executive chairman of the $1.2 billion Capricorn (CMM), a real success story among gold explorers/developers transitioning to producer status.

Initially at least, Bellavista will focus on four target areas, three covering zinc, nickel and copper, and the fourth targeting uranium and platinum group metals for good measure. Drilling is to start immediately after listing.

The Brumby zinc-copper-silver project is the current flagship. CRA/Rio Tinto drilled it back in the 1990s and returned broad intersections over a prospective horizon said to extend over at least 30sqkm.

Historic drill results included 29m at 1.3% zinc, 0.22% copper and 24.5g/t silver. There is plenty of space for Bellavista to go looking for higher grade feeder zones, as well as define a supergene target at the base of oxidation (35m).   

At the issue price, Bellavista will have a market cap of $13.3m. It is not a lot nowadays for an explorer with the cash, the projects, and the people.

PVW RESOURCES (PVW):

It goes without saying that junior explorers are going to find it a lot harder to raise equity funds in coming months.

Even those with quality projects will find it harder, unless they are prepared to dilute existing shareholders big time by raising funds at the much lower levels forced by the broad market sell-off.

But it is not a problem for all of them as some got in before the door was slammed shut on sweetly priced raisings.

Those that did can forge ahead with their exploration programs while the rest of the pack will be tapping the brakes to ensure they don’t become distressed seekers of fresh capital.

The rare earths and gold explorer PVW is one of the juniors that can forge ahead, thanks to the completion of a $9.5 million two-tranche placement at 40c a share announced back in April to institutional and sophisticated investors, with the latter category rumoured to have included Gina Rinehart’s Hancock Prospecting.

PVW is now trading back at 29c a share for a market cap of $28 million due to the broader market sell-off. But participants in the placement won’t mind that as they got on board because of the potential for PVW’s Tanami heavy rare earth’s discovery in WA to shape up into something special.

About 80km to the north, the $195m Northern Minerals (NTU) owns the advanced Browns Range heavy rare earth project. So a rare earths province is the making. None of that is lost on PVW executive director George Bauk.

He was managing director of NTU for yonks. What he doesn’t know about the rare earths industry (and the xenotime-hosted mineralisation at Browns Range and PVW’s discovery) is not worth knowing.

George and the market got excited last October when rock chip sampling at the Killi Killi East target in the Tanami project area returned up to 12.45% in total rare earth oxides. The target was part of an 18km stretch of a regional unconformity now considered prospective for hydrothermal-related mineralisation.

Funds from the placement mean that PVW can get busy drill testing targets along the 18km stretch of unconformity to extend areas of known mineralisation. Its first drilling program is expected to kick of next month, initially at the Killi Killi East and Watts Rise prospects.

Rare earth prices were on the tear in 2021, with the price strength continuing in to 2022 as the world consumes more of the stuff in its decarbonisation efforts, and as part of a US and European-government back strategy for the West to wean itself off China’s vice like grip on the market.

It is a mega-trend, the importance of which swamps any nervousness that rare earth investors might currently have due to the broader equity market sell-off. All PVW needs to do now  is to deliver drill results that confirm it is on to something special.

BATTERY MINERALS (BAT):

The broad share market selloff is resulting in there being more sub-$20 million caps among the junior explorers than there has been for a long time.

Having a sub-$20m market cap does not mean that the leverage to the upside which attracts investors to the space in the first place no longer exits. It just means that the leverage is now cheaper to acquire.

Battery Minerals (BAT) is a case in point. Its shares have retreated to all of 0,8c a share, giving it a market cap of $18.7m.

Like all of the juniors, its share price retreat is a result to the all-pervasive risk-off sentiment currently dominating market thinking. Yet BAT has three near-term newsflow events that could get it back in to the $20m-plus market cap club overnight.

The first is completion of the August 2021 deal to sell its Mozambique graphite assets to the London-listed Tirupati Graphite for $12.5m in cash and (mainly) shares. Completion of the deal is waiting on government approval.

The exit from Mozambique came with BAT’s pivot to gold/copper in western Victoria, and copper-nickel-cobalt-PGEs near Halls Creek in WA’s East Kimberley region. Drilling at both is planned to start in the September quarter, and both have the potential to excite for BAT with its modest market cap.

In western Victoria, rock chip samples have confirmed the presence of high grade gold (up to 430g/t) at Coxs Find. But more than that has been the scientific work highlighting the value of conducting detailed IP geophysics to define bedrock gold-sulphide drill targets.

BAT is doing just that by ordering up a survey as a precursor to drilling, likely in the September quarter. Any discovery won’t need to be on the big side of things to make a difference to BAT with its modest market cap.

Coxs Find is all of 10km from the privately-owned mine and treatment plant at the Stawell. So whatever it finds has a potential pathway to being monetised.

In the East Kimberly, BAT’s Russells copper-nickel project has been worked up to the drill ready stage with gee-whiz survey work completed after 30% copper rock chips were encountered last year.

It is an interesting one. Others had been keen to get their hands on it but tripped over at the heritage clearance phase. It’s another one with the potential to excite once drilling gets underway in the September quarter.

  

     

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