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Kalkine IPO Report

Should you invest in the IPOs of these 2 ASX Battery Metal Companies?

Oct 06, 2021

Dundas Minerals Limited

The Offering

Company Overview

Dundas Minerals Limited is an Australia-based exploration company incorporated on April 21, 2020. The main objective of the company is to identify opportunities to acquire or make application for exploration licenses within areas of Western Australia that are considered prospective for the occurrence of nickel and gold deposits. Post-Acquisition, Dundas Minerals Limited will prepare for an initial public offering (IPO) to raise capital for funding its exploration strategies and listing on the Australian Securities Exchange (ASX).

Use of IPO Proceeds

Source: Company Prospectus

Capital Structure

Source: Company Prospectus

Key Management Personnel

Source: Company Prospectus

Financial Highlights (as on 30th June 2021)

Source: Company Prospectus

  • The company has yet not reported any topline numner, interest income is only source of income for the financial year ended June 30, 2021.
  • Since, the inception of Dundas incorporation in April 2020, the company has focused on raising seed capital for funding the exploration of the nickel-gold-copper projects along the Albany-Fraser Orogen, and the completion of initial geophysical surveys.
  • The company reported Net losses of AU$377,166 for the financial year ended June 30, 2021
  • The company’s cash position at June 30, 2021 stood at AU$897,247.
  • Net Cash Used in operating activities stood AU$42,219, net cash used in investing activities stood at AU$218,034 and Net cash flow from financing activities stood at AU$1,157,500 .
  • The company has reserves of AU$336,623.
  • As at June 30, 2021 the compay’s total non-current assets stood at AU$207,106 and total liabilities of AU$256,068 againt total non-current assets of AU$290,406 and total assets of AU$1,301,026.
  • Total Asset/Equity ratio of the company as on June 30, 2021 stood at 1.245x, implying that most of the assets are backed by equity capital.

Risk Associated (Moderate to High)

As a diversified miner the company is exposed to a variety of risks including mining exploration licenses, renewable of exploration licenses, regulatory risks, climate risk, rise in input costs due to surge in inflationary pressure, and other macro-economic risks. Also, resurgence in COVID-19 cases could also hamper the mining work.

Conclusion

The company is coming with this IPO to raise a maximum amount of AU$6.0 million to advance its nickel, copper, and gold assets in prolific Albany-Fraser Orogen. The key driving force behind this IPO is the ongoing global demand for nickel and copper together with the strong gold price since March 2020.

The company holds four granted exploration licenses and eight license applications, including one held by a third party for which it has exclusive right to acquire upon grant.

However, investment in this IPO carries a lot of risks ranging from commodity price risks, liquidity risks, regulatory risk to other macro-economic risks.

Hence, the IPO of Dundas Minerals Limited looks ‘Attractive’ only for Investors with Moderate to High-Risk appetite. 

Lykos Metals Limited

The Offering

Company Overview

Lykos Metals Limited is an Australian company incorporated on May 06, 2021, with sole purpose of acquiring entire issued share capital of Lykos Balkan Metals pursuant to acquisition agreement. Lykos Balkan Metals is a battery metals exploration and development company. Its projects include exploration and extraction of nickel, copper, cobalt, precious metals, lithium and REE.

Use of IPO Proceeds

Source: Company Prospectus

Key Management Personnel

Source: Company Prospectus

Financial Highlights (as on July 31, 2021)

Source: Company Prospectus

  • The company has not yet reported any revenue.
  • Loss for the reported period stood at AU$55,631.
  • Audited cash and cash equivalents as on July 31,2021 stood at AU$212,986.
  • Receivables as on July 31st, 2021, stood at AU$7,065
  • Pre-paid expenses stood at AU$24,320.
  • The company is debt free, with its Total Asset to Total equity ratio at 1x as of July 31, 2021,
  • Expected Cash and Cash Equivalents after IPO gets exercised would stand at AU$11,142,187.

Risk Associated (High)

 The company is exposed to a variety of risks ranging from licenses risk, regulatory risk, liquidity risk, volatility in the underlying commodity prices, credit risk, resurgence in COVID-19 cases to other macro-economic risks. Further, a higher inflationary pressure could also weigh-in on the group’s financial health.

Conclusion

Given the past performance of the battery manufacturer in the IPO market, Lykos could also witness the same kind of listing potential. Further, the company’s projects have a decade-long mineral discovery and extraction history but remain almost entirely unexplored by modern geological exploration methods. The historical data gathered and analyzed by the Company’s management team implies a significant exploration potential for the key battery metals needed for the worldwide energy transition and other precious and base metals.

However, there are various risks associated with the investment, given the micro-cap market categorization and significant dependency on the commodity prices, which is quite volatile.

Hence, the IPO of Lykos Metals Limited looks ‘Attractive’ only for Investors with High-Risk appetite.


Disclaimer-

Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.

Kalkine Media LLC, an affiliate of Kalkine Equities LLC, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.