Newly minted Stratum Metals (ASX: SXT) could be admitted to the ASX and list on the boards as early as next week.
The company has completed a fully subscribed IPO funding for 20 million shares at 20 cents, raising $4 million with E.L. & C. Baillieu as lead manager and distribution support from Bell Potter Securities and Wilson HTM.
Total issued capital will be 41.15 million shares, consisting of 16.1 million vendor shares, 5.050 million pre-IPO seed shares and 20 million IPO shares, providing $4.3 million in cash. The directors will hold 6 million options exercisable at $0.25 and $0.35 by 7 June, 2016.
Stratum looks to have momentum at its side at listing given these main points: the float actually attracted more than $4 million, very strong support from the broking community, the directors have successfully listed ASX companies recently and the company has a drill rig ready to turn at the company's Gidgee Gold prospect in October.
Chairman is Rick Anthon, who was also chairman of International Coal (ASX:ICX) which traded as high as as $0.30 above their 20¢ issue price. Anthon is also chairman of Baru Resources (ASX: BAC) which hovered around listing price of $0.20 on listing day.
Another Stratum director, Michael Addison is also a director of Carabella Resources (ASX: CLR) a Queensland coal explorer that has been a star since listing in December 2010 and a "4-bagger" for investors as its share price hit $1.60.
Managing director Martin Holland has managed to navigate stormy markets to raise funds and garner support and assemble an interesting portfolio of prospects.
Gidgee Gold Project
The Gidgee Gold Project is located 640 kilometres northeast of Perth, and is within an established mining region with a long history of gold production.
The project consists of E53/1440 at Gidgee South covering 7,500 metres of strike line on the Tokay Shear, and is 8,000 metres north of Panoramic Resources (ASX: PAN) Gidgee Gold Project, which has a mining camp and process plant with a capacity of 600,000 tonnes per year of ore.
Stratum's plan is to fast track development of gold resources at Gidgee North and strike a deal to utilize the Gidgee Plant for ore processing. With first drilling at the project due to commence in October, and a second campaign to start in December there exists potential for earlier low cost production given a nearby gold treatment plant.
Stratum’s Gidgee North gold tenement sits just eight kilometres from Panoramic Resource’s (ASX: PAN) Gidgee gold project. This has a 600,000 tonnes per annum treatment mill.
With a drill rig ready to turn in October and another program to start in December, the strategy could likely be to treat its ore at Panoramic’s plant, minimise capital expenditure and fast track to production and cash flows.
Canning Basin Coal Assets
Coal interests are held in an 80/20 Joint Venture with State Resources at the Canning Basin Coal Project, which is located approximately 150 kilometres southwest of Derby, in the Kimberley Region.
Stratum owns three exploration licences that are still in the application phase.
The Canning Basin is the largest onshore sedimentary basin in Western Australia, and is an emerging coal province.
The project area is less than 20 kilometres from Rey Resources (ASX: REY) Duchess Paradise Project which hosts an Inferred Resource of 535 million tonnes of coal. Rey has fended off two takeover offers for the company, indicating the demand for coal from Asian interests.
The main coal bearing strata within the basin is known as the Lightjack formation, which is contained within the Fitzroy Graben that covers the northern end of the Canning Basin.
The Stratum Metals Joint Venture includes applications for E04/1993, E04/2124 and E04/2125 covering an area of 465 square kilometres that are all located
within the Fitzroy Graben, and cover known outcrops of Lightjack formation, and are in the vicinity of modest intersections of sub bituminous coal reported by Rio Tinto (ASX: RIO) from historic exploration within the Canning Basin.
Stratum intends to establish a budget and exploration program after the tenements are granted.
Demand for coal - India
With an almost insatiable demand for coal to fuel economic growth and development, India is facing further shortfalls in coal demand and supply.
This year India will produce 554 million tonnes of coal but demand is likely to hit 696 million tonnes of coal. By 2016, it is estimated that India will require over 1 billion tones of coal - a shortfall of 300 million tonnes it cannot produce.
Chairman of India Energy Forum Coal Group, NN Gautam said this week India will become more and more dependent on imported supplies. Gautam said, "India will have to acquire coal mines outside India."
So while very early days, Stratum Metals will look to be a part of the long term solution for India with its Canning Basin coal assets. The Canning Basin is a fast emerging coal region handily located to supply India. The region's importance is likely to become even more significant and coal explorers that prove up a significant resource are likely to be in demand from industry investors and investors alike.
One of the best ways to gauge success of an IPO is if shares in the float are hard to come by. With that premise and above factors (assuming markets are kind) Stratum Metals looks one to watch.