Australian small-cap exploration company AusQuest Limited (ASX: AQD), is focussed on exploring copper, gold and other base metals within Australia and Peru with most projects being funded under a Strategic Alliance Agreement with South32 Limited.
During the last quarter, the company’s exploration activities were focused on completing the permitting process for Stage 2 drilling at the Cerro de Fierro IOCG Project, located in southern Peru ~140km south of the Mina Justa Cu deposit. AusQuest Limited was also focused on identifying potential drill targets at the Parcoy Copper Project in southern Peru.
In Australia, the company’s efforts during the quarter were focussed on completing target drilling at the Hamilton (Queensland) and Telegraph prospects (Westen Australia), also under the Company’s Strategic Alliance Agreement (SAA) with South32.
Developments in September quarter
Last quarter, the company made substantial progress in relation to the development of its projects in Australia and Peru.
- In Peru, the company continued with exploration at the Cerro de Fierro and Parcoy Projects. It completed the surface sampling at both sites to identify copper and gold targets for follow-up, including drilling. Further, the company also initiated the reconnaissance sampling over permits owned 100% by AusQuest in order to provide new opportunities under the SAA. The company is accessing new areas within the Cerro de Fierro – Parcoy region.
- In Australia, the company completed two important activities during the quarter. Firstly, it completed the in-fill air-core drilling at the Telegraph prospect at the Balladonia Project in the Fraser Range region of Western Australia. And secondly, it completed the initial diamond drill testing of the Hamilton IOCG prospect in north-west Queensland.
Cash Position (September Quarter)
- The company spent a total of around $1.43 million on exploration & evaluation activities during September quarter. During the quarter, the company received funding of $791k from South 32 under the Strategic Alliance Agreement.
- At the end of September 2019, the company had cash and cash equivalents of $1.198 million.
- During the December quarter, the company expects additional funding of ~$2.0M for drilling in Peru from South32. The total estimated cash outflow for the December quarter is around $2.020 million, which includes $1.8 million to be spent on exploration and evaluation activities.
- The company has also announced a placement and rights issue fundraising closing November 8th.
Upcoming Drilling Programs
Recently on 28 October 2019, the company announced that it has commenced the access and site preparation work for the upcoming drilling programs in Australia and Peru.
The company has scheduled a program comprising six Reverse Circulation (RC) drill-holes for ~1,600m to be undertaken at the Telegraph Prospect at Balladonia, in the Fraser Range area of Western Australia. With all access approvals already obtained, the company is ready to commence this program in the second half of November.
The company’s drilling initiative intends to test beneath recent air-core drill-holes which intersected anomalous copper (300 to 5,500ppm Cu), silver (1 to 51gpt Ag), lead (150 to 1,800ppm Pb) and zinc (400 to 2,900ppm Zn) values within a deeply weathered (>99m) alteration profile, outlining a base metal target approximately 500m x 200m in size (refer below images).
Balladonia Telegraph Prospect – air-core drilling results and depth to bedrock contour (Source: Company’s Report)
At the Cerro de Fierro Copper Prospect, the company expects to commence a second round of diamond drilling comprising four drill-holes for ~2,400m in the second half of November 2019. A drilling contract has already been signed with AK Drilling International S.A., and camp / access preparations have been initiated.
From this drilling, the company expects to test for extensions to the copper-gold mineralisation intersected previously in drill-holes CDFDD03, CDFDD06 and CDFDD02, as well as testing new areas of interest with similar geophysical, geochemical and geological indicators.
It is to be noted that both of these programs are being funded under the Company’s Strategic Alliance Agreement (SAA) with South32.
AusQuest’s Managing Director, Mr. Graeme Drew commented
“These projects represent potential company-makers for AusQuest, and we are excited about what the upcoming drilling programs could deliver”
Raising Capital to Explore More
To undertake exploration programs on the Company’s 100% owned properties, and to identify and investigate new acquisition and exploration opportunities both in Australia and Peru, the company is raising up to $2.4 million via a Placement ($0.5 million) and Rights Issue to shareholders (~$1.9 million).
AusQuest has secured firm commitments to raise up to $0.5 million via a placement of up to ~35,714,286 fully paid ordinary shares at an issue price of A$0.014 per share to qualified sophisticated and professional investors, with each share having a free attaching option.
In addition to this, the company intends to undertake a 1 for 4 pro-rata rights offer to the company’s eligible shareholders on the same terms, including the issue price of $0.014 per share and with each new share issued having attached a New Option, to raise around $1.9 million. The company has already issued a Prospectus for the same.
AusQuest’s largest shareholder, Chrysalis Investments Pty Ltd (22.7% holding), has indicated that it proposes to subscribe for its full entitlement under the Rights Offer.
To further delve into the Prospectus, Click here.
The company intends to continue pursuing new opportunities in base metals, both within Australia and offshore. The company has finalized the agreements with Native Title owners over the Paterson Range tenement applications. It now expects the grant of the titles before the end of 2019, allowing early-stage exploration work to commence shortly thereafter.
AQD stock last traded at $0.014 with a market cap of ~$7.69 million and outstanding shares of 549.31 million.