Exploration Company Kalamazoo Resources Seeks to Raise $10m in IPO
The Snake Well project has an existing mineral resource inventory and upcoming exploration activity is designed to highlight the commercial potential of the project.
Kalamazoo Resources Ltd is an Australian minerals exploration company focused on gold, base metals and copper. Kalamzoo seeks to list on the ASX on 25th November after raising $10million through the issuance of 50 million shares at $0.20 each.
The Company’s primary asset is the fully owned Snake Well Project located in Western Australia, which covers an area of 263km2 and has total combined Mineral Resources of 107,000 ounces. Kalamazoo is also involved in the Cork Tree joint venture project with Atlas Iron.
The Snake Well project has an existing mineral resource inventory and upcoming exploration activity is designed to highlight the commercial potential of the project. Successful, cost efficient appraisal could be a value driver. Mineral Resources at the Cork Tree Project have not been identified and with the mine located near the De Grussa Mine, there is exploration upside.
Kalamazoo is reliant on external capital to fund exploration activities and there is no guarantee that the required funding can be procured. The scale of the project is not yet of sufficient scale to justify capital expenditure required for mine development and there is no assurance that an economic ore deposit can be developed.
Kalamazoo offers speculative exposure to the Western Australian resource sector. We are attracted to its strategic position and existing mineral reserve inventory at the Snake Well Project. Whilst exploration risks are elevated, funding requirements and the scale of its operations are additional hurdles. Historical test work at the Snake Well has indicated the potential for mineralisation, but there is no guarantee that additional resources can be identified. The Initial Public Offer and subsequent $10 million raising appears ambitious in light of the development state of the company’s assets, thus investors require a long-term speculative appetite.
ASX Code: KZR
Shares on Offer: 50m
Listing Price: $0.20
Market Capitalisation: $21.6
Listing Date: November 25
Author: Simon Herrmann
Oct 31, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.