FYI, there has been a couple IPO's of aspiring WIM mineral sands explorers/developers in January that may be of interest to Astron and other mineral sands punters/investors and provide some points of comparison with ATR, with even the noted HC mineral sands pundit @2ic proffing some opinions despite his/her general reluctance to opine on WIM wannabees...
VHM is developing the Goschen mineral sands project located in the Murray Basin south of Swan Hill in NW Victoria. Goschen has a JORC ore reserves of 199Mt @ 3.7% HM within a resource of 629 Mt @ 2.9% HM. VHM have produced a DFS for Goschen as a monazite sand/RE project with zircon/titania by-products with a phase 1 target of 9-11ktpa of RE mineral conc. and 184ktpa of zircon/titania conc. from 5mtpa HM ore throughput. Goschen have secured an offtake MOU with Shenghe Resources of approx 60% of phase 1 production.
Although a Goschen DFS was completed in March 2022 only select details were published in VHM prospectus with very limited financial details given, such as estimated phase 1 total CAPEX of A$445m and OPEX of A$120m p/a for a 5Mtpa project. No financial metricise for Goschen such as NPV (I did however find reference to a discount rate of 10% hidden in a table in the technical evaluation, so they have obviously done the maths), IRR, cashflow projections or payback periods included in the prospectus, which indicates to me the results were not particularly positive. A revised Goschen DFS is scheduled for release in 1H/2023 so hopefully it will include updated financial details.
The Goschen project is at an earlier stage of permitting than ATR/Donald with the EES yet to be approved and no mining lease granted. They are targeting FID in 2H/2023 which may prove a little ambitious given their current progress and the Andrews government's demonstrated attitude to approvals of new mining developments, ref. Fingerboards HMS project and onshore gas!
When compared to ATR's Donald project basic metricise of JORC ore reserves of 602Mt of HM within a total resource of 1810 Mt @ 4.9% HM and advanced permitting with a mining lease, EES, cultural heritage (no native title issues apparently), water permits and radiation licence all in place, IMO you would expect the market cap of ATR to be a multiple of VHM. However surprisingly in their Jan 23 IPO, VHM was valued at A$266 (197 million shares at $1.35) v. ATR's valuation at the Nov 22 SPP of A$70m @ 54cps. These valuations have since narrowed somewhat with a current market cap for VHM of $A226m v. ATR at A$93m, but considering the above comparison and factoring in ATR's well established PRC mineral sands processing and distribution business you could reasonably expect these valuations to be reversed.
However some discussion on the HC VHM thread identified concerns with ATR's share register being so dominated by Tiger Brown and Mdme Kang Rong, and governance concerns after the ill advised and unsuccessful attempt to demerge the PRC processing business as reasons for the disconnect in valuations. Perhaps new ATR chair George Lloyd and the board could take into account these concerns when planning the post DFS and pre FID capital structure for Donald in order to improve liquidity in ATR and hopefully encourage some institutions to come on board.
The other IPO was for ACDC Metals (ASX: ADC) which has some unJORC'd Murray Basin mineral sands tenements scattered throughout Western Victoria, including one surrounded by VHM's Goschens tenements. They also have a licence agreement from Vancouver based Medallion Resources for a new monazite sand C&L process that is still 'on the bench' but promises reduced consumables and power consumption in comparison to the more traditional approach adopted by Iluka's Eneabba and Lynas' Kalgoorlie and LAMP facilities. All this is very early stage stuff but it will be interesting to see if they have any luck with the drill bit... GLTAH!
ATR Price at posting:
72.0¢ Sentiment: Hold Disclosure: Held
