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In This List

Mineral sands hopeful Relentless Resources defers IPO ahead of resource update

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Mineral sands hopeful Relentless Resources defers IPO ahead of resource update

Relentless Resources Ltd. put its IPO — originally slated for February — on hold while it aims to potentially quadruple the net present value of its heavy mineral sands projects in New South Wales, Australia.

The company won ownership of its flagship Copi project in June 2017 along with Woolcunda and parts of the Milkengay and Nanya North ilmenite projects following a legal dispute with Broken Hill Prospecting Ltd.

Having consulted for Relentless as a mineral sands expert with mining consultancy Optiro, Andrew Law was brought onto Relentless' board in October 2017 before being appointed project director in May 2018.

Relentless issued a prospectus in the fourth quarter of 2018 targeting an A$8 million ASX IPO in the first week of February.

However, Law said market sentiment in the second half of 2018, which intensified at year-end, prompted Relentless' major shareholders, including former chairman and current nonexecutive director Ralph Stagg, to believe that it was best to do a A$5 million private equity raise instead, which will close April 1.

A 2018 pre-feasibility study on an initial 2017 JORC resource of 14.2 million tonnes at 6.4% heavy mineral, or HM, grade estimated an NPV of between A$50 million and A$55 million with a 6.2-year mine life.

The resource was updated in the third quarter of 2018 to 21.1 million tonnes at 5.2% HM grade.

Relentless will update the pre-feasibility study after finishing infill and extensional drilling over the next few months. The drilling will lead to a resource update on Copi North and South and at Sunshine, which comprise the current resource, around July and August 2019.

Law said that once the study is updated, the NPV figure could soar into the mid-A$200 million level. Relentless believes that the Copi project alone has the potential to be twice as long geologically as the current estimate of 16 kilometers.

He said the ASX IPO may eventually occur during the updated pre-feasibility study, which should be completed by June 2020.

The Copi South project, 80 kilometers south of Copi North, includes a 700-meter heavy mineral sands zone of more than 10% grades in historical drilling within 35 meters of surface. The Sunshine project also represents a 4-kilometer western extension to Copi North.

The Magic project has a 15 million tonne JORC resource at 3.7% HM grade. Budgeree has no resource as yet. Relentless is planning to build an additional concentrator at the Magic-Budgeree project area to process future ores.

The company is planning to get Copi into production by late 2020, including a proposed A$20 million concentrator on-site and potentially a small-scale mineral sands processing plant that separates the zircon from the other titanium oxide feedstocks such as ilmenite, rutile and leucoxene.

Law said that while there have been some discussions with potential off-takers, none are being progressed until the resource is updated with the aim of expanding the project to a 15- to 20-year mine life.

With about A$25 million in infrastructure costs needed, A$5.6 million for pre-development, A$3 million for sustaining capital and about A$6 million for the separator, Relentless is looking at a total cost of roughly A$40 million. This will likely be funded with a combination of equity, debt and off-take deals.

Relentless has already started significant discussions with local community stakeholders and expects to lodge an environmental impact statement with the state government in November, which should be approved by the second quarter of 2020.

Law told the Mineral Sands Conference in Perth, Western Australia, on March 21 that using fresh water as mineral sands projects often do "was a fight we were never going to win" with local agricultural landholders, and he revealed how their attitudes changed once Relentless decided to use salt water instead.

"It's amazing how the animosity of angst just evaporated and we became great friends," he told conference delegates.

Relentless also believes that the water-use issue will play favorably with environmental regulators. It said that because the project only needs about 60 people, the local towns will not be "flooded" with hundreds of mine workers. "Many skills can also be sourced from the local area anyway," Law added.