Analysts agree the heat has come out of the battery metals market somewhat but that should not stop what could well be the ASX's next commodities float, Galileo Mining Ltd., particularly with well-known West Australian veteran prospector Mark Creasy involved.
Galileo lodged the prospectus April 9 for its coming initial public offering, looking to raise A$15 million, and Creasy — who played a pivotal role in the landmark Nova-Bollinger nickel project discovery and sold the Bronzewing and Jundee gold deposits for A$130 million in 1994 — will be the float's largest shareholder with a 31% stake post-listing.
S&P Global Market Intelligence confirmed that Independence Group NL, which now owns Nova-Bollinger, has taken about 4.9% of Galileo, which was meant to start trading on the ASX on May 11 but has been delayed until May 22 — a tentative date. It is understood the delay has less to do with the junior or investors and more to do with the exchange's internal processes.
Mineral Resources Ltd.'s managing director, Chris Ellison, has also taken a stake in Galileo, as have some of his fellow directors, but just how much has not yet been released to the market.
Creasy, who is also the biggest investor in Independence with roughly 16%, founded Galileo and also privately owns other tenements around the new company's acreage.
Brad Shallard, senior equities adviser at Bell Potter Securities, the lead manager for Galileo's IPO, said investors participating in the IPO — including Rod Jones, who was named Ernst & Young's Entrepreneur of the Year in 2008 — are "positively biased towards the electric vehicle market," where battery metals like lithium and cobalt are used.
He said Galileo's initial focus would be on the Norseman cobalt project over the next six to nine months, then the Fraser Range project, in a geological belt with proven prospects for nickel mineralization with the 2012 discovery of Nova-Bollinger.
While a Patersons analyst revealed at an explorers' conference in February that the financial advisory's Lithium Index had soared 69% over the past 12 months, Shallard told S&P Global Market Intelligence that the market was becoming "a bit discerning and more sophisticated" about how they value technology metals assets, as "the easy money has been made in the uplift."
"It's not like about a year ago you'd put something out about lithium and the share price would run," he said. "The underlying thematic is still robust. We haven't had any trouble raising money for these projects, the heat has just come out of the market, based on valuations."
Corporate advisory Argonaut's Mining Resources Analyst Matthew Keane agreed that while there's "no doubt" battery metals companies are "coming off highs," they're certainly not falling away as a popular investment choice.
He told S&P Global Market Intelligence that late 2017 witnessed a "rebirth" of interest in battery metals when a few investor trips up to China occurred and "they realized there was a lot of expansion still happening" among the Asian giant's downstream battery plants.
That was followed by various off-take agreements with many Australian-listed battery metal project developers, particularly lithium, but since then the news flow has cooled off, he said, which could be because "most of the guys who can off-take [their product] have those agreements in place."
According to S&P CapitalIQ, Argonaut has been involved in the second-most amount of metals and mining transactions in Australia over the past three years behind only BDO Corporate Finance (WA) Pty. Ltd., but Shallard said that now "you can count on two hands how many [cobalt] hopefuls there are."
They include Clean TeQ Holdings Ltd., which raised A$150 million in a deal underwritten by Macquarie Capital and BMO; Cobalt Blue Holdings Ltd. whose Thackaringa project is in New South Wales; Aeon Metals Ltd.; Northern Cobalt Ltd.; Conico Ltd., which is also involved in a cobalt-nickel project at Mount Thirsty with Barra Resources Ltd.; and Havilah Resources Ltd.