Unlisted public company Mount Hope Mining is set to test investor appetite for the Cobar region in central New South Wales, with an initial public offering (IPO) that will spin out the local assets of Argentina-focused silver explorer Unico Silver Ltd.
The company will be listed under the MHM ticker.
Mount Hope is surrounded by significant base metal and gold mines. Pic: Mount Hope Mining prospectus.
The IPO aims to raise a minimum of A$5 million before costs by issuing 25 million shares at A$0.20 each, with the option to accept oversubscriptions of up to an additional 5 million shares, potentially increasing the total raised to A$6 million.
Unico announced its intent to divest a 100% interest in the Mount Hope Project, to Mount Hope Mining on October 23. The sale is contingent on the successful Initial IPO and ASX listing of MHM.
Through a Share Purchase Agreement (SPA), Unico and its subsidiary, Land and Minerals Pty Ltd, will transfer ownership of Fisher Resources Pty Ltd, which holds four mineral exploration tenements (covering 175 square kilometres) in the Mount Hope copper and gold district souith of Cobar, to MHM.
Upon completing the SPA, MHM will issue Unico with five million fully paid ordinary shares, valued at A$0.20 per share, in exchange for Fisher Resources.
The SPA's completion relies on MHM’s due diligence, necessary approvals from boards, shareholders and regulators, as well as MHM’s admission to the ASX official list following a successful IPO, aiming to raise A$5 million.
MHM lodged a prospectus with ASIC on October 22, 2024.
Cobar interest grows
Interest in Cobar is rising as CSA's latent production capacity, combined with refreshed management and growing activity from major operators, places a premium on potential discoveries from explorers like Mount Hope Mining in this revitalised region.
CSA Mine, situated 11 kilometres northwest of Cobar, stands as one of Australia’s highest-grade copper mines. Operating at a depth of 1.9 kilometres, it is also among the nation's deepest underground mining operations.
The mine produces approximately 40,000 tonnes of copper annually, extracted and processed onsite before being transported 700 kilometres by rail to the Port of Newcastle for export to Asian smelters.
Running continuously 24/7, CSA Mine directly employs around 500 people, including contractors. Most team members reside locally in Cobar, contributing to and embracing the town's close-knit, community-focused lifestyle.
Alongside current operations, the mine holds 566 square kilometres of tenements with potential for expansion, aiming to secure a sustainable future for CSA Mine.
“The CSA mine is the biggest in the region and has been operating semi-continuously for about 150 years, yet notoriously has excess milling capacity,” Mount Hope MD Fergus Kiley said.
“ Glencore (LON:GLEN) was never motivated to go and buy the other juniors in Cobar to keep the mill full because it would just be more administration of them and not accretive value.
“In terms of Glencore they’ve divested perhaps one out of 30 of their operations and you've put it into a company where it's their sole asset and sole focus.
“Now they (MAC) are highly motivated to have that mill running at capacity because they're already running it."
Kiley believes that having the district's largest operation managed by a team focused on expansion could benefit nearby explorers.
With a mill capacity of 1.5-1.8 million tonnes per annum, Metals Acquisition has expressed interest in inorganic growth opportunities, aiming to acquire additional projects that can boost throughput and operate the mill at full capacity.
Investor interest in IPOs remains strong
Despite only 20 companies going public so far this year — a decline from 30 in 2022 and significantly lower than the record 202 listings in 2021 — investor interest in initial public offerings (IPOs) remains strong.
As of November 11, 2024, the average IPO has delivered a 20.2% return on day one, with an average gain of 37% since listing.
In the resources sector, Sun Silver Ltd leads with the highest one-day return this year (+112.5%) and the largest gain since listing (+287.5%).
The Seneca Australian Small Companies Fund participated in Sun Silver’s IPO in May and is also supporting Mount Hope Mining’s upcoming listing. Seneca's Luke Laretive noted that Mount Hope aligns with the fund's six-step investment criteria for early-stage exploration companies.
Mt Hope highlights
Mount Hope Mining’s expansive 175-square-kilometre landholding lies adjacent to the historic Mount Hope Copper Mine, where around 75,000 tonnes of rock were previously extracted at an impressive copper grade of 10.5% from a single massive sulphide lode.
Within this area, five key exploration targets have been identified, including four advanced zones: Mount Hope East, Black Hill, Main Road East and Little Mount Solitary. Each of these advanced targets displays geological indicators similar to those seen in Aurelia Metals' recent Federation Project discovery.
Mount Hope has five exploration prospects all ready to go. Pic: MHM prospectus.
Strategically positioned, Mount Hope Mining’s project area benefits from close proximity to producing base metal operations owned by Aurelia Metals Ltd (ASX:AMI), Metals Acquisition Ltd (ASX:MAC, NYSE:MTAL) and Aeris Resources Ltd (ASX:AIS, OTC:ARSRF).
The region has seen recent high-profile discoveries by companies such as Peel Mining, with projects like Wagga Tank – Southern Nights, Mallee Bull and Wirlong, as well as by Australia Gold and Copper Ltd with their Achilles discovery.
Mount Hope Mining has secured land access agreements with all relevant private landholders, enabling unhindered exploration across its tenements.
The company’s valuation, currently around A$3.25 million enterprise value (based on an A$8.2 million market cap and A$5 million cash), has already drawn significant investor interest, with indicative bids surpassing the minimum A$5 million required for its IPO.