Alien Metals AIM:UFO, the AIM-listed precious and base metal exploration company with operations in Mexico and Australia, has gone down equity road to avoid the much-travelled debt motorway – a wise move given the current interest rate environment and the power that lenders now have to determine their terms.
The company announced last week that it had completed a GBP2m equity placement, which meant that it was not going to avail itself of Bennelong Limited (a London-based private equity and venture capital firm investing in exploration and development projects in the natural resources and technology sectors)’s offer to take up the USD500,000 second tranche of convertible notes and 10,000 warrants (at a 35% premium).
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The total funding package from Bennelong was USD1m agreed at the beginning of July for immediate working capital requirements, with the option of another USD1m in warrants bringing up the total package to USD2m. Bennelong currently holds 6.34% of Alien Metals. The funding included two tranches of USD500,000 of convertibles to be drawn in equal tranches, and the second tranche is the one that Alien declined. Interest on the loans was set at 8% a year with a 12-month repayment schedule and 3% commitment fee and 2% withdrawal fee.
Aussie Iron
The Bennelong funding was to be deployed on developing Alien’s Hancock project. As previously reported, Alien owns 90% of Hancock, its flagship iron ore project in Western Australia through its 100% owned subsidiary, the Iron Ore Company of Australia (IOCA). IOCA also has a 90% interest in the Brockman project and wholly-owns the Vivash Gorge iron ore project, both of which back onto Tier One tenements owned by major mining corporates such as Rio Tinto and FMG.
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The placement was completed on 10th August, issuing a billion new shares at GBP0.2 pence per share at a 29% discount on 8th August’s closing price and was used to fund salaries in the UK and Australia, overheads, corporate activities and working capital through to the start of next year as well as furthering exploration in Australia. Alien issued broker, WH Ireland near to 40 million shares in lieu of fees. Both non-exec chairman, Alwyn Vorster and Troy Whittaker, CEO participated in the fundraising.
As previously reported Hancock is around 20km from the nearest town and 400km from the blue-water harbour of Port Headland and the company has approval to build a highway intersection that will be suitable for large quad bulk trucks. The project is in a productive area of real estate, surrounded by a number of other productive iron ore mines, managed by majors.
The Hancock project had a total JORC-compliant resource of 9.1 million tonnes (Mt) at a grade of 60.3% iron or. The mining inventory is 4.2Mt at a grade of 60.5% inclusive of a 1.89Mt reserve at 60.16% grade.
Whittaker said: “”We are pleased to announce that the company will not be drawing on the Tranche 2 funding to help with the company’s medium-term financing projects. The company successfully raised GBP2m through a placing announced to the markets last week to help advance the Hancock Project and unlock the value contained within Pinderi Hills.”
It’s been a busy month for Alien Metals, with a game of musical chairs between IOCA and Alien. Whittaker was CEO of IOCA and acting group chief executive of the Alien Group, and he was confirmed as Alien’s CEO at the beginning of the month. Vorster joined from Iron Ore Holdings, after previous stints in the boardrooms of Hastings Technology Metals, BCI Minerals and senior positions at Aquilla Resources and Rio Tinto Iron Ore.
Alien Metals boardroom changes
Guy Robertson has become finance director after keeping the chairman’s seat warm temporarily and lawyer, Elizabeth Henson joined as non-exec director, also holding non-exec positions at Future Metals [LON:FME] and Alba Minerals LON:ALBA.
Prior to the boardroom change-around, Alien announced that it had started a Definitive Feasibility Study on Hancock to optimise the mine plan, its infrastructure layouts, and nail down the final capital and operating cost estimates for the project. Alien hired Mining Plus to carry out the DFS. This followed a scoping survey, and the project is in the process of negotiating with Native Title Holders and firming up its Environmental Impact Studies with the hope that operations on the mine would commence in 2024.
Alien Metals is still at the exploration end of the exploration and production curve, and as such has no revenue and posted a USD2.4m loss in the year to end-December 2023, compared to a USD2.3m loss the year previously. As such no dividends will be paid out.In 2022, Alien had around USD2.2m of cash on hand, a significant drop compared to the USD6.4m it had in 2021, however, capitalised exploration costs in 2022 was USD3m, compared to USD2,4m the year previously and management had cut administrative expenses when compared to total assets to 13% last year, compared to 17% in 2021.
Alien opened trading at 0.1935p today (21st August), and had fallen to 0.1873p by lunch. Alien’s shares have ranged between GBP0.8p and 0.1825p over 52-weess, offering a -64.3% year-to-date return and -66.8% one-year return giving the exploration company a market capitalisation of around USD12.2m.
Bridgewise rates Alien Metals as a ‘Sell’, stating: “Alien Metals published concerning results on 27th September 2022. Their growth, value, and income factors performance indicate that company management are not executing well their business plan. Typically, results like these translate into sustained negative momentum and strong downward pressure on stock price. Therefore, we assessed them with a rating of 50 and a ‘Sell’ recommendation.”
Alien Metals also holds silver, copper and base metal projects in various locations around the world however is currently looking at the best way to divest these for the benefit of shareholders. Its other projects include the Elizabeth Hill Silver Project and Munni Munni PGM project, also in Australia.
