|Air core drilling at the Mt Marshall kaolin project in Western Australia.
Source: UltraCharge Ltd.
A backdoor listing will see battery technology company UltraCharge Ltd. re-quoted on the ASX on July 31 as Suvo Strategic Minerals Ltd., focused on West Australian kaolin and silica projects, a market where lead IPO manager Sandton Capital Advisory says investors are now comfortable with volatility being the "new normal."
Sandton Managing Director Michael Shaw-Taylor told S&P Global Market Intelligence that the encouraging number of ASX IPOs both completed and underway, along with the swath of recent raisings, shows "investors are comfortable with the new normal, which is volatility."
"I've seen a number of placements coming out over the last month. It's outrageous ... one day we saw 16 term sheets and they're all getting oversubscribed and well bid for, so there's certainly liquidity there," he said.
After initially planning to relist in February before COVID-19 struck, Ultracharge shareholders will now meet on July 7 to approve the A$5 million offering, for which Sandton has received substantially more interest than the amount sought. The company will have a market capitalization of some A$10.5 million upon listing.
Suvo will first look to develop the Mt Marshall kaolin deposit, which has a maiden JORC resource of 35.1 million tonnes of white kaolinized granite with an average ISO brightness of 80.3 and average yield of 38.2%. ISO brightness is an industry standard for measuring the diffuse blue reflectance factor of kaolin, which determines marketability.
|Suvo Strategic Minerals
Source: UltraCharge Ltd.
Aaron Banks, Suvo's managing director-designate, told a June 29 investor webinar that the high ISO brightness and fired whiteness results seen in Mt Marshall are "significant," and that its naturally occurring high grades are "critically important" for supply into the ceramics industry.
"The whiter the kaolin fires, the higher the premium," said Banks, who discovered what has become one of the largest high-grade silica sand resources in the world, Muchea in Western Australia, which he sold to VRX Silica Ltd. in 2016.
There are more industrial minerals projects Asian customers want that Suvo will seek to acquire in the coming year, Banks told S&P Global Market Intelligence.
He said one of Mt Marshall's best holes had an ISO brightness of 89.19, which he described as "exceptionally high," and that the maiden resource estimate was based on drilling just 5% of the tenements at Mt Marshall, which the company wants to turn into a 500,000-tonne-per-annum operation.
Banks also flagged significant rail capacity running up to the tenement that is underutilized, and the company has several options via ports in Geraldton, Fremantle, Kwinana and Bunbury both north and south of Perth, the state's capital, to get the product to Asia.
Banks told investors that before COVID-19 hit, China made about 18 billion square meters of floor tiles, which require sizable kaolin input, while Vietnam made about 900 million square meters in 2019.
Once listed, Suvo will also look to develop the potentially very large, low capital intensity Eneabba silica project, which the company hopes will be a low-impact, chemical-free mining operation, with shallow JORC drilling planned for late 2020 and preliminary test work having already confirmed identical raw feedstock grades to market peers. An inferred JORC resource at Eneabba is due mid-2021.
While COVID-19 has restricted Ultracharge's ability to meet personally with all prospective buyers, as relationships are critical in industrial minerals markets, they did get to Malaysia, Vietnam and Thailand before the virus hit. Going forward, the company will be aided by 45-year industry veteran Ian Wilson as an independent advisor to the board, and consultant Murray Lines, an Asia specialist.
Wilson was with English China Clays PLC. It was bought out by Imetal SA, now Imerys UK Ltd., in 1999, and the company put him in charge of assessing every known kaolin deposit on the planet to help inform which acquisitions it wants to make, Banks said in an interview.
"Imerys is constantly on the lookout for good-quality kaolin that has a good logistics solution and life of mine, all of which we have," he said. "People take Murray and Ian very seriously in the kaolin world, so we're leaning on their relationships" in Asia to secure off-take partners who will be critical in determining which logistics route to take.
"Imerys, the world's largest kaolin supplier, hasn't developed a single kaolin mine in its history. It's acquired them all [through M&A]. So Ian and others believe that once we define this resource, get it up to 1 million tonnes and have the mining permits in place, we'll struggle to hold onto this asset," Banks added, implying corporate activity.