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Incorporated on 18 May 2018, Cobre Limited is an Australian based exploration company which is currently focussed on the exploration of its Perrinvale Project, which is located between Menzies and Sandstone in Western Australia.
Following the heavily oversubscribed initial public offering (IPO), Cobre Limited (ASX:CBE) is due to commence trading on the ASX shortly. As per the company’s prospectus, the offer was to issue 50 million shares at a price of $0.20 per Share to raise $10 million.
In its prospectus, the company had disclosed that it has already received a firm commitment from Metal Tiger to subscribe for between 10 million Shares and 12 million Shares, at an issue price of $0.20, for a minimum subscription amount of $2 million and a maximum subscription amount of $2.4 million.
Cobre Limited Main Assets
It is to be noted that Cobre holds 80% shareholding in Toucan Gold Pty Ltd, an Australian proprietary company which is the legal holder of the Perrinvale Tenements comprising the Perrinvale Project.
In addition to the Perrinvale Project, Cobre has secured an earn-in joint venture opportunity in the Sandiman Tenement which consists of a single exploration licence covering an area of 202km2 that may have potential sediment hosted and VMS base metal deposits.
Application of Funds
The raised funds from the IPO will be used for drilling, geophysics and geological studies to progress the Perrinvale Project, along with the exploration of the Sandiman Project and ongoing working capital requirements. In addition of using the fund for its existing exploration programs, the company also intends to utilize the funds for working capital, which can be used to cover its corporate and administrative costs; and to pay for the expenses incurred by the company arising from the Offer.
Exploration objectives in details
In terms of its exploration strategy, Cobre is focussed on seeking out projects that indicate undeveloped potential. With respect to the Perrinvale and Sandiman Projects, the Company’s strategy extends to focus expenditure on unlocking the potential in those projects.
- Sandiman Project: The funds will be used to confirm the potential for sediment hosted base metal mineralisation through systematic exploration starting with detailed surface mapping, sampling and mineralogical studies;
- Perrinvale Project: Further, the funds will be applied to enable Toucan to implement further exploration and drilling programs aimed at delineating and better defining the existing VMS prospects, while also systematically exploring the broader project area for mineral potential.
Copper Outlook
The company’s strategy is to focus on minerals and metals where the market outlook indicates potential supply shortages. The Board views base metals generally, and copper specifically, as being aligned with this strategy.
In its prospectus, the company has mentioned about the forecasted consumption of Copper. As per Roskill projection, the total copper consumption in all forms will increase from 30.6Mt in 2018 to 43.6Mt by 2035 at a CAGR of 2.1%. Further, Roskill expects total copper demand in electrical applications to expand from 24.1Mt in 2018 to 35.0Mt by 2035 in copper content terms at a steady CAGR of 2.2%. Region wise, the total copper consumption in North America is projected to rise very modestly from 2,867kt to 3,124kt over the 2018-2035 period at a CAGR of 0.5%. In South American region, the total copper consumption is projected to increase at a moderate CAGR of 1.9% between 2018 to 2035, rising from 538kt to 745kt. China is of course the world’s single largest national consumer of copper as its total consumption has continued to perform well rising from 12.2Mt to 14.7Mt between 2014-2018 at a compound annual growth rate of 4.8%.
Do the company had adequate funds?
The company believes its available cash and the net proceeds of the Offer should be adequate to fund its business development activities, exploration program and other objectives in the short term as stated in this Prospectus. If the estimates in the budget prove to be insufficient, the Company may then be seeking development capital through equity, debt, joint venture financing or through the sale or possible syndication of its mineral properties.
Due to the significant expenditure that will be incurred by the Company in the development of the business, the Company does not expect to declare any dividends for the foreseeable future.
Bottom Line
Currently, Cobre is focussed on the implementation of its ‘money in the ground’ strategy at the Perrinvale Project and moving forward, it will maintain a systematic approach towards exploration activities and unlocking potential deposits. At Perrinvale, the company will focus exploration activities on the search for, and possible delineation of, VMS base metal resources while also remaining aware of the potential for both the Panhandle and Illaara Greenstone Belts to host high grade gold. On the other hand, the exploration at the Sandiman Project will be focused on confirming the conceptual potential via a systematic exploration approach, utilising detailed mapping, geological/mineralogical studies, ground geophysics, and in the second year, initial drilling.
