This week’s Bulls N’ Bears profiled ASX runner is … Arrow Minerals. Its shares tripled this week to join fellow movers and shakers Battery Minerals, West Cobar Metals and Sigma Healthcare.
“I only care about the rocks.”
These were the heartfelt words spoken by former Delta Lithium executive chairman David Flanagan in an interview with the West Australian this week after he emerged as the top choice to become the managing director (MD) of Arrow Minerals – subject to shareholder approval, of course. It was the sort of earthy sentiment that clearly shows the WA mining notable is a man after this columnist’s own heart, especially with three of this week’s biggest ASX runners coming from the resources sector following a couple of weeks of domination by software, technology and medtech companies.
Arrow hit the target (pun completely intended) this week when it revealed Flanagan would be engaged as a part-time consultant until his official appointment as company MD, with his new role heavily focused on unlocking the value of its Simandou North iron project in the West African nation of Guinea.
The surprise revelation from the company that had a market cap of just $3 million last week launched it to a 200 per cent share price hike to touch 0.3 cents from a previous close of 0.1c. It finished this week with a market cap of $9 million.
Flanagan, the 2014 West Australian of the Year, certainly has the runs on the board – and the rocks to match.
Prior to being ousted from Delta by Chris Ellison when Mineral Resources took a controlling interest in that company earlier this year, Flanagan was the founding MD of Atlas Iron during a period when it built five new iron ore mines in five years. He was also a former director of MACA, an international contracting group providing services to the mining, infrastructure and construction sectors.
And Simandou North also looks to have the goods.
First-pass drilling at the operation in October returned some impressive results, with highlights showing a 12m hit grading a whopping 60.1 per cent iron from just 2m and a 4m section at 58.75 per cent iron from 10m. Additional thick zones of elevated iron greater than 40 per cent were also intersected consistently throughout the Kowouleni target area.
Arrow holds a 33.3 per cent beneficial interest in Simandou North and is earning a 60.5 per cent controlling interest in the project as it advances toward full ownership.
The operation sits near the Simandou iron ore project where Rio Tinto holds a major share through its Simfer joint venture (JV) with Chinalco. In 2021, the project was reported to hold a mineral resource of 2 billion tonnes grading a ridiculous 65.5 per cent iron, with production slated for 2025.
Flanagan’s potential appointment – it is still subject to shareholder approval, remember – also coincides with Arrow’s plans to raise up to $4million through a $3.5 million two-tranche placement at 0.1c per share and a share purchase plan for an additional $5000,000 at the same price, with the incoming MD subscribing for $175,000 worth of stock.
While Guinea is still recovering from a military coup back in 2021, the sheer size of Arrow’s project in the African nation, in addition to the high-profile neighbours at Simandou, show it could be about to hit the bullseye. And with a potential MD channelling his inner Cupid to so openly profess his love for rocks, this Arrow may well be ready to really let fly and we may well see the company in this column again in the New Year.
Once again, one of the big runners of the past week has managed to jump without releasing any market sensitive announcements.
This time it is Battery Minerals, which surged more than 268 per cent to touch 14c after a previous close of 3.8c, seemingly on the back of a change of substantial holdings? That was it. Didn’t even bother to classify the announcement as market sensitive. The company, which before today posted gains in eight of the previous nine days, was issued a “Please Explain” from the ASX and was adamant in its response that there was nothing untoward.
However, last Friday, Battery Minerals outlined a private placement at a premium to two strategic investors at 3.8c per share, with 14.76 million new fully-paid ordinary shares issued to raise $560,880.
Doing a bit more research shows that these shares were snapped up by two unlisted companies, Lotaka and Gladstone Mining. And just who are the respective directors of these two organisations? Why, it is only Liontown Resources chairman Tim Goyder and Northern Star Resources managing director and chief executive officer Stuart Tonkin.
Fittingly, Goyder’s Lotaka took the lion’s share (get it?) by spending $304,000 for about 8 million fully-paid ordinary shares, with Tonkin’s Gladstone picking up the remainder.
So, when two big names start taking an interest in a company, the market tends to file in behind like sheep in a paddock. But the real question is why?
Well back in August, Battery Minerals announced the acquisition of the Spur gold project in the highly-prospective Lachlan Fold Belt in New South Wales, which sits just 14km from Newcrest Mining’s Cadia Valley operations. Earlier this month, after reprocessing historic induced-polarisation geophysical data, the company defined a southerly-plunging anomaly away from existing mineralisation that includes an 86m hit at 1.56 grams per tonne gold and 536 parts per million copper.
Spurred (get it?) by the potential upgrade at the site, Battery Minerals is planning to kick off 2000m of reverse-circulation (RC) and diamond drilling at the site early next year.
Could Goyder and Tonkin know something we don’t? Could these two industry giants possibly have an inkling of the upcoming potential of the site?
Maybe the pair of mining heavyweights are just excited about Battery Minerals changing its name to Waratah Minerals, a move that received the green light today, as they are avid rugby union fans. Or maybe, just like Flanagan, they too only care about the rocks…
West Cobar Metals was also given a “Please Explain” notice from the ASX after its shares jumped more than 80 per cent to touch 9.9c from a previous close of 5.4c. In its follow-up explanation of possible reasons for an unusual price hike, the company pointed to a major achievement in beneficiation trials at its Salazar rare earths project near Esperance that it revealed earlier in the month.
To be fair, the trials did show some impressive results, including producing concentrate of 5.08 per cent total rare earth oxides (TREO) from a sample ore grade of 0.148 per cent, representing a 34:1 upgrade. Managing director Matt Szwedzicki described the results as a “game changer” and he might just be on the money.
Salazar is a clay-hosted operation with a mineral resource of 190 million tonnes at 1172ppm TREO, based on two deposits at its Newmont and O’Connor prospects.
But it should also be noted that West Cobar released another announcement today that highlighted a thick, mineralised intercept at its Bulla Park copper project in central NSW. A single diamond hole recorded a 146m intercept grading 0.16 per cent copper, 0.03 per cent antimony and 3g/t silver from 136m including 14m at 0.44 per cent copper, 0.13 per cent antimony and 5g/t silver from 262m.
Did the market know something ahead of today’s announcement? Probably not and let’s be honest, the results at Salazar are probably enough to justify the interest from traders. Perhaps we have to care about the rocks AND the testwork.
Finally, last week’s worst kept secret came to fruition this week with Sigma Healthcare climbing more than 76 per cent to reach $1.35 from a previous close of 76.3c on the back of a proposed merger with Chemist Warehouse. Sigma management describes the move as “transformational”, with a plan to create a leading healthcare wholesaler, distributor and retail pharmacy franchisor.
More than 81 million Sigma shares moved on Wednesday, eclipsing the company’s previous record this year by about 45 million. Another 30-odd million shares also changed hands on Thursday.
The announcement coincided with Sigma’s plans to undertake a fully-underwritten entitlement offer to raise about $400 million to provide the increased working capital required to implement the Chemist Warehouse supply contract detailed in August for the supply of both Pharmaceutical Benefits Scheme (PBS) medicines and Fast-Moving-Consumer-Goods products.
There has been a speculation about this deal for months, with Sigma already the owners of several retail chemist brands including Amcal, Discount Drug Stores and Guardian. The merger is still not a done deal though and requires an official green light from the Australian Competition and Consumer Commission, in addition to both Sigma and Chemist Warehouse shareholders.
So, could we see a new pharmacy giant on the ASX horizon? Only time will tell ... and hopefully those in charge care about more than just the rocks.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
