A1M - AIC Mines

[greggles]

5,000m of RC drilling has recently commenced at the Lamil Project to test four previously undrilled targets (Sundew, Flame Pea North, Flame Pea South and Foxtail). This program follows on from the almost complete four hole 1,584m diamond drilling program that commenced in June.

A1M now move to a 50% interest in the Lamil Project after spending the required $6 million over four years. They can move to a 65% interest by spending an additional $4 million in the next 12 months. The assay results from the current diamond and RC drilling programs will obviously be the determining factor in whether A1M continue investing capital into the Lamil Project.

 

[greggles]

A1M bouncing back nicely this week on a recovering copper price and improving sentiment. Cost cutting measures at the Eloise Mine will hopefully improve profitability and ongoing drilling at the Lamil Project will hopefully yield some positive results.

 

[greggles]

On Friday A1M gave notice that it will not be taking up its option to enter into a 50/50 JV with Rumble Resources in the Lamil Project. The question is, will A1M elect to earn an additional 15% in the Project by funding a further $4 million over the next 12 months?

With one month to decide and assay results from the Lamil Project currently pending, September is likely to be an interesting month for the company.

 

[greggles]

A1M commences a 4,800m RC drilling program at the Marymia Gold and Copper Project. This is a follow up to the 2021 drilling program and hopefully they will have better luck this time.

 

[greggles]

A1M launch all scrip takeover bid for Demetallica Limited at an implied price of 33.7c a share, 68% more than the closing price of Demetallica Shares of 20c on 16 September 2022. DRM only listed in May this year.

Demetallica's Jericho copper deposit is only 4km from A1M's Eloise copper mine. The synergies are obvious and I predicted earlier in this thread that A1M would likely seek to acquire copper deposits in the vicinity of the Eloise mine to take advantage of the infrastructure they already have there.

A very clever move by A1M management, even taking into account the premium they are paying. The transaction values DRM at around $30 million which is a pittance for the copper they have in the ground and the potential of their other projects, especially considering DRM had over $10 million in cash at the end of June.

No word yet on what DRM management think of the bid.

 

[greggles]

New high grade copper-gold lens discovered 150m NE from the current Eloise Deeps mining level. Grades and widths are impressive. Management understand how important it is to continue to increase reserves around Eloise. I think they will continue to focus on this as a priority.

Still waiting on DRM's target's statement. Should be here soon.

 

[greggles]

DRM has advised shareholders to reject A1M's takeover offer, for the reasons outlined below. I expected that they would, but I also expect that some shareholders will take this opportunity to exit given the current global economic and geopolitical uncertainty. A change in substantial holding notice also released today indicates that A1M has so far acquired 1.6% of DRM as a result of takeover offer acceptances.

It will be interesting to see how all this plays out. I still think DRM holders are better off with A1M given its better financial position and position as a copper producer. It will be hard going for DRM as just an explorer with many capital raisings to come.

 

[greggles]

Aaron Colleran sets out the case for DRM shareholders to accept the A1M offer and does a pretty good job. Unfortunately the DRM shareholders at another venue have taken offence at the below letter, believing it to be aggressive and arrogant.

They apparently believe DRM is worth more than the A1M offer, even though DRM has no path to production for the Jericho Deposit. A1M, on the other hand, has a path to production for Jericho and it will happen a lot quicker under their management.

 

[greggles]

8 months old, but an interesting and informative watch nonetheless.

 

[greggles]

Deal is done. Varied offer is 1.3 DRM shares for 1 A1M share, representing an implied offer price of 39c per DRM share. The DRM board has recommended that shareholders accept the offer and has said that it has received letters from seven shareholders, representing no less than than 24.4% of DRM, stating that they plan to accept the revised offer.

The takeover values DRM assets at $37.4 million dollars, including around $7.5 million in cash given that DRM had $8 million at the end of September.

I think it's a win-win situation for both sets of holders but some DRM shareholders are still unhappy thinking that the deal should have been sweeter. I think they should be grateful that they will receive the equivalent of 39c for shares that were trading at 20c six weeks ago.

 

[greggles]

I commented in the DRM thread regarding the takeover by A1M, and now I will comment here.

This takeover is a great deal for A1M. Not only have they successfully expanded the copper resource with which to feed the mill at Eloise, but they have also just scored themselves a cool $7.5 million cash. This takeover has effectively served as a clever capital raising for A1M. They also now have a new suite of exploration projects that should keep them busy for the forseeable future.

There should be no further capital raisings for A1M. Shares may be issues for the purposes of acquisitions but they should not need to raise cash from here on. They have enough copper in the ground for many years and I expect that they will snap up more deposits in the Cloncurry region to keep the Eloise mill busy. The cash generated from this copper production will fund A1M's corporate expansion in the coming years, specifically the development of other mineral exploration projects.

I see very little downside for A1M from here, other than possible macro factors that could impact the copper price, or the price of other metals that may affect A1M. The foundation for success has been formed with this takeover and now it is the job of management to grow the company through exploration and acquisition. Given what they have managed to do in the last couple of years, I have confidence that A1M is in very capable hands.

 

[greggles]

As of this morning A1M now owns 40.07% of DRM. This week should see acceptances flood in as those still holding DRM see the writing on the wall.

 

[greggles]

A1M now own 58.82% of DRM. The deal is done. Also interesting to note today is that a boutique investment management company by the name of Firetrail Investments has taken a 5.06% stake in A1M through a series of on market purchases during October and November.

 

[Dona Ferentes]

AIC is looking for $30 million at 45¢ a share, an 8 per cent discount to the last close and 7.5 per cent lower than the 15-day VWAP.

Potential investors were told AIC would use the proceeds to expand its Eloise project to 20,000 tonnes a year and to bring on the adjacent Jericho copper-gold deposit, which was a key asset in the tenement it acquired by takeover of listed junior Demetallica last year.

Put together, the two would have a 295,000 tonnes copper resource and 210,700 ounces of gold, which would support a ten-year mine life.

 

[greggles]

AIC is looking for $30 million at 45¢ a share, an 8 per cent discount to the last close and 7.5 per cent lower than the 15-day VWAP.

Potential investors were told AIC would use the proceeds to expand its Eloise project to 20,000 tonnes a year and to bring on the adjacent Jericho copper-gold deposit, which was a key asset in the tenement it acquired by takeover of listed junior Demetallica last year.

Put together, the two would have a 295,000 tonnes copper resource and 210,700 ounces of gold, which would support a ten-year mine life.

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I'm a little surprised that they have decided to raise capital now, but understand their reasons for doing so. Given their circumstances, I think that this is likely to be their final capital raise for a very long time. If the price of copper remains high, Eloise should generate enough profit to allow them to stockpile cash.

The reasons they have given for getting Jericho online as soon as possible make complete sense and doing so will reduce their AISC and their reliance on the Eloise Deeps.

I have said before that I believe A1M management will be looking to acquire other copper deposits in the Cloncurry region. Having cash available may mean that they do not have to dilute further to acquire any such deposit.

 

[greggles]

Equity Raising Presentation just released. A1M has no fewer than eight separate exploration projects thanks to their takeover of DRM. I imagine they are running the ruler over all of them at the moment and at least some of the capital raised will be used to advance some of them.

 

[greggles]

A1M preparing to ramp up exploration around the Eloise mine.

 

[greggles]

A1M added to the XAO effective 20 March. This is likely to lead to some buying by funds in the near future. Will be interesting to see the effect that has on the share price.

 

[greggles]

Ord Minnett Research report on A1M dated 23 February 2023 with a Speculative Buy recommendation and a price target of 70c.

A slightly softer 1H23 result (vs OMLe) but given its immateriality (low base) we wouldn’t expect the investment community to give it much attention. 3Q operational performance is likely to garner more interest following a softer 2Q. We anticipate a +20% production (and +A$15m earnings) improvement in 2H as we see increasing contribution from Macy North, combining with contractor development haulage and improved sequencing. This, along with study updates (through 2023) and exploration results should see the name move higher – assuming no deterioration in copper price / sentiment. We retain our Buy Recommendation and A$0.70/sh Target Price.

https://www2.asx.com.au/content/dam/asx/broker-reports/2023/a1m-update-24-02-2023.pdf

 

[greggles]

AIC Mines presentation from the Brisbane Mining Investor Conference: Wednesday, 22 March.

AIC Mines Limited - Brisbane Mining Conference - 22 March 2023 - 9:15am

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