Torque Metals Ltd is raising $2,000,000 through a public offer of 20,000,000 Shares at an issue price of $0.10 each.
Torque Metals Key Points
- Small highly leveraged gold play
- Two major projects in key WA locations
- All underexplored by modern methods
- Paris project near important Boulder-Lefroy Fault
- Paris/HHH gold project has 32koz Indicated resource on existing Mining Lease
- Inground value >A$80m Net value ~A$16m (min)
- Bullfinch gold project has good exploration prospects
- Pre money value of Torque is only A$4m
- A$2m @ A$0.10 IPO closing 3 July
- Very good Independent Expert’s Report in Prospectus
- Listing on SSX in mid July
- Term Sheet and Prospectus attached
Call me to discuss investment here. +61 2 9222 9111
For a public offer of 20,000,000 Shares at an issue price of $0.10 each to raise $2,000,000.
Oversubscriptions of up to a further 5,000,000 Shares at an issue price of $0.10 each to raise a further $500,000 may be accepted.
SSX Code: 8TM
Lead Manager
Martin Place Securities
AFSL 291787
bdawes@mpsecurities.com.au
Phone: +61 2 9222 9111
www.mpsecurities.com.au
SSX Sponsor
Trident Capital
AFSL 292674
http://www.tridentcap.com/
Important Information
You must read this important notice before you attempt to access the electronic version of the Prospectus through this website. The information on this page is not part of the Prospectus. If you do not understand it, you should consult your professional adviser without delay.
Lodgement of Prospectus with ASIC
The paper form of the electronic version of the Prospectus (including its attached Entitlement and Acceptance Form) accessible through this website has been lodged with the Australian Securities and Investments Commission.
No offer of securities is made on the basis of the electronic version of the Prospectus accessible through this website. An application for securities can be made by completing the Entitlement and Acceptance Form attached to or accompanied by a paper form of the Prospectus and then lodging the form and the application monies in accordance with the details set out in the Prospectus and the relevant Entitlement and Acceptance Form.
No Advice
Nothing contained on this website or in the Prospectus constitutes investment, legal, business, tax or other advice. In particular, the information on this website and in the Prospectus does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, you must rely on your own examination of the Company and the securities and terms of the offering, including the merits and risks involved. You should consult your professional adviser for legal, business or tax advice.
WARNING
For legal reasons, the electronic version of the Prospectus accessible through this website is available to persons accessing this website from within Australia and New Zealand, only. If you are accessing this website from anywhere outside Australia and New Zealand please do not download the electronic version of the Prospectus.
The Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the offer. It is the responsibility of any applicant outside Australia and New Zealand to ensure compliance with all laws of any country relevant to their applications, and any such applicant should consult their professional advisers as to whether any government or other consents are required, or whether any formalities need to be observed to enable them to apply for and be allotted any securities.
It is not practicable for the Company to comply generally with the securities laws of overseas jurisdictions having regard to the number of overseas shareholders, the number and value of securities these shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the offer pursuant to the Prospectus is only being extended and securities will only be issued to shareholders with a registered address in Australia and New Zealand.
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Torque Metals has two projects - One at Paris/HHH to the South of Kalgoorlie and the second at Bullfinch at Southern Cross to the West of Kalgoorlie.
Paris/HHH is near to production and surplus cash would provide additional funds for further exploration.
The Boulder-Lefroy Fault is the dominant structural feature in the Kalgoorlie region and this diagram clearly shows its NNW-SSE orientation
and the numerous subparallel structures either side.
All the largest gold mines in this region are on or very near this Boulder-Lefroy fault which is acting as the mineralised fluids plumbing system. Paris/HHH is within 50km of some very large gold deposits and the area has not had much modern exploration.
The Paris/HHH Gold Project deposit had 18koz recovered in 2017 in a small mining operation and currently has a JORC `Indicated’ resource of 32,000 ounces
on existing granted pre Native Title mining leases that should allow gold production within the next 18 months. The previous scoping study is still basically current.
Assuming a conservative 50% recovery and $1000/oz margin at A$2500/oz just this resource this would bring A$16m cash surplus to the project.
As with all mines, the increased A$ gold price will increase the total gold in a revised pit design so the resource number should be higher
Paris has good high grade zones and some old workings and good potential down plunge.
The HHH deposit has potential down dip and in the footwall.
Additional potential is noted in a sub parallel structure at Paris North where 5.2m @ 14.2g/t has been intersected.
The 68km2 contiguous granted mining lease tenements have additional potential along strike at in the sub parallel zones for Strauss and Marmaracs.
But much of this is underexplored.
Paris has also has a 10km northward extension in a 80% earn in JV with Jindalee Resources Ltd.
Some high grade intersections have been encountered including Maynard’s Dam with 3m @28g/t.
Source:PSA
These two tenements are well known to Petsec and the potentially >110million barrel Al Meashar discovery was drilled by Petsec’s now-current MENA team.
With these two blocks Petsec now has potential oil production from each in the next six to nine months.
Each block has the potential to produce substantial cashflows for Petsec that would match the company’s current market capitalisation in 2018 and far exceed it in 2019.
Yemen’s geology reflects the abundant and unquestionably high quality source rock that has provided the carbonaceous source to oil formation throughout the Persian Gulf region but it also reflects massive regional tectonic activity that has literally shattered much of the brittle crystalline rocks such as granites and high grade metamorphics. Oil from the source rocks has entered the intensive fracturing joints which have in many cases become very large reservoirs for oil entrapment. The Masila oilfield region has several fractured reservoir fields totalling over 2 billion barrels and many of the post- 2000 oil discoveries in Yemen have been in such reservoirs.
The abundance of high quality source rock indicates a much higher probability of any potential trap being charged with oil.
Consequently these fractured basement reservoirs offer the potential of oil fields with hundreds of millions of barrels of oil. `
Fractured Granites at Surface in Yemen
Source: Oil Search
The Al Meashar discoveries in Block 7 had an 800m oil column down to total well depth(no oil-water contact was encountered so this is still `open’ at depth) with much of this in fractured basement.
Al Meashar Wells 1 and 2 with Reservoir Estimate Targets
Source: PSA
This field is only 14km from Austrian oil company OMV’s Habban oil field that has a 945m oil column in fractured basement and reserves of 170 million barrels in a very similar geological environment.
The An Nagya field is a `conventional’ oil field but it also has potential for fractured basement reservoirs beneath it.
An Nagyah Oilfield with vertical and horizontal wells
Source:PSA
`PSA is following Oil Search, now a major LNG producer out of PNG that in 2000 had also set up a Yemen portfolio and drilling ~50(including 12 exploration) wells. PSA, unlike Oil Search, has acquired 100% of existing or producing fields and infrastructure (as well as the experienced management and technical teams) on very modest outlays and so eliminated most capital expenditure risk.
The parameters set by Oil Search for a Yemen portfolio are otherwise the same:
The link is here:-
Improving prospects for a peaceful resolution in the hostilities allowed the Yemen Government’s national oil company Petro Masila in August 2016 to recommence oil production in the Masila oil fields in the eastern half of Yemen, well away from the disputed regions of the Shiite Houthi rebels near the northwest border with Sunni Saudi Arabia.
Oil production is now around a reported 75,000 barrels per day and is pumped via the 138km Ash Shihr pipeline and allowing resumption of oil exports. Shipping has resumed and an estimated six million barrels have now been lifted since August 2016 without incident.
Petsec’s An Nagyah field has 15 shut in oil wells and 20,000bopd processing capacity that are linked to the major Marib pipeline that runs 438km to the Red Sea but this pipeline is closed and is not considered likely to be reopened before 2019.
However, Petsec considers that it will receive official confirmation of its work plan during the Sept Qtr 2017 that will allow installation of a truck filling gantry (July) and a commencement of trucking convoys to Petro Masila oil fields and gaining access to the Ash Shihr pipeline for export.
The Yemen Government has historically relied on oil revenues for around 60% of its Budget income and in the current environment has encouraged foreign companies to resume oil production.
An Nagyah in Damis Block S-1 has 20,000bopd capacity today and should be able to re open wells to commence at 5,000bopd and steadily build up to 20,000bopd from existing wells and additional infill and appraisal wells. The additional undeveloped resources should ensure the capacity of processing facility is filled.
Damis Block S-1 Reserves
The two Al Meashar wells should provide at least 1,000bopd while production testing. The exploration potential in Block 7 is very high as these unrisked targets show.
Petsec should receive about 63% of the fields oil revenues under the Production Sharing Agreement to cover authorised capital and operating costs and its ~29% of the oil field profit. All sales receipts are received offshore to Petsec’s account. These cashflows should allow the drilling of infill wells and subsequently some exploration wells on structures that have >100m million barrel targets.
I have done considerable due diligence on this company’s operations and consider it an absolutely outstanding opportunity.
There is a large amount of information to absorb to fully understand the opportunity here but I can say that the numbers are very high and the risks are surprisingly low.
The key issues are that:-
1) Yemen is an early stage exploration target with underexplored basins and huge volumes of source rock
2) The MENA staff at Petsec spent over 10 years drilling wells here with Oil Search so they know the people, the local situation and the geological potential.
The stock is A$0.15 and my target of A$1.46 is only notional and only uses the Low Case of 5,000bopd in Yemen.
A perfectly rational high case could be >A$10/share.
The PER for 2018 calendar Year is <1x and operating costs are <US$15/bbl and these would fall to about US$10/bbl once output is linked to a pipeline, probably in 2019.
Looking at it dispassionately , it is clear that once production begins at An Nagyah, Petsec will be generating a lot of cash from low cost operations and should become something of a super stock. Next to no capex is required and the two Blocks have accessible reserves ready for production and have very substantial upside.
The oilfields and basins in Yemen are only in the early stages of exploration when large structures are being tested and, given the undoubted high quality of the Arabian Peninsula source rocks, it will certainly mean large oilfields are to be found. The Hunt Jannah Block (to the west) and the Masila fields (to the east) are each over 2bn bbls.
The existing fields are significant and in the experience of most operators in this basin it seems that they simply become much larger than initially thought.
The Petsec MENA team led by Maki Petkovski have actually been the operators here in Yemen for many years through Oil Search so they know the geology, drilled many of the wells and most importantly, know the bureaucrats, local businessmen and politicians who make things happen in Yemen.
The Yemen assets are almost beyond comparison with petroleum exploration prospects in Australia or in the very mature shallow Gulf of Mexico basins so the opportunities brought into Petsec are practically without peer for any ASX-listed company.
Risk is in the eye of the beholder and whilst the entire Middle East is unstable and hostilities continue in the north west of Yemen the operations of Petsec should be able to work within a supportive community and government umbrella to resume output and apply risk capital, probably through farmins, to drill some of the indisputably attractive exploration/development targets.
Petsec has acquired these magnificent assets and should production resume at An Nagyah as planned and Al Meashar deliver even modest reserves the upside is very high.
Oil prices are currently softer on oversupply concerns but underlying demand has been rising faster than most forecasts so the medium term outlook incorporating increasing imports to China and India should not be negative for oil prices.
MPS Research Report Low Case Earnings Forecasts for PSA at A$0.15.
The link to the Research Report is here:-
The Dongfang Modern Agriculture Holding Group IPO has provided an excellent window into China to see how its domestic economy worked. DFM.ASX is now pushing A$1,000m market capitalisation after reporting a better-than-Prospectus forecast figure of A$90m.
DFM Share price chart.
DFM is now the market leader with around 2% market share of citrus harvesting measured by revenue through the sales of almost 250,000tpa of tangerines, navel oranges and the now very chic pomellos. It is a relative giant in a highly fragmented industry of citrus production and harvesting.
Dongfang has a market of 1,400m potential consumers and should be able to capture more of the market through organic growth and acquisition.
China has a very high savings rate and household bank deposits of well over RMB100 trillion (~US$17tn) so it could be expected that Chinese household expenditures will continue to rise into ever higher levels of consumer affluence.
The higher disposable income supports a higher consumption level of fruit and protein (as meat, poultry and seafood) at the expense of grains.
Property in China provides another very interesting aspect of economic transition.
China builds new cities to provide new production facilities and to accommodate retail, industrial, commercial, office and residential activities.
These cities are well planned with roads, rail, power, water and other infrastructure established ahead of time and the residential accommodation follows.
Residential complexes need food and consumer retail establishments as the people move in.
We all should already be aware of the speed with which these Chinese buildings are erected and completed with 24/7 construction at rates that in Australia we might only dream about.
We should also be aware of the market demand in many of these regional areas surrounding second and third tier cities. Strong, without the speculative element seen in Beijing, Shanghai and Guangzhou (Note that Shenzhen property prices are again at all time highs).
Sichuan Taifeng has been running its Zigong real estate operation since 2001 and currently has around 130 staff, and is a major developer of office building, convention centre, shopping centres and large scale residential property in Zigong. It currently has 18 buildings under construction in Zigong with development costs of over CNY 1.2 billion (AUD $265m).
Sichuan Taifeng specialises in property developments that add value well beyond the simple construction process and any commodity residential apartment development.
The Yantan New District is well established and a new shopping centre is being built to cater for current population of 30,000 which is planned to grow to about 60,000 over the next three years.
Aerial view of building site showing Yantan New District with Zigong City across highway in top left
The development is close to the centre of this new district and will be the Zigong GuoFeng Farmers Market consisting of 40 ground level retail shops, a second floor level of 500 local farmer fresh fruit and vegetables produce stalls, two stories for larger scale commercial development and a fifth floor for office space in a 5 storey shopping centre.
The site is just over 9,000m2 and all ~17,500m2 of commercial property will have been sold on completion.
Artist Impression of the Guofeng Farmers Market
Surrounding new apartments in New Yantan with site in foreground
The total cost of construction is set at around A$20m and the sales are estimated conservatively at A$37m (conservative assumed prices at the time of completion of around 25% lower than current have been used) to give a net A$14m and an actual cash surplus for distribution of A$17m.
Should the average sales prices be at current levels the total sales revenue would be almost A$10m higher and the gross after tax position would be about A$7m higher.
LCG has an option to acquire a 51% equity interest in this development of the shopping centre from Sichuan FuChuan Property Co Ltd ('SFP'), the private company that owns the project.
LCG's 51% share of the base case net after tax returns would be A$6.6m or A$0.15 per share fully diluted.
Site earthworks and excavation for the foundations and basement have commenced. Sale of `strata' commercial space is expected to begin in the September Qtr 2016 which will allow additional bank funding and above ground construction to commence. Completion is expected by March Qtr 2018.
On appropriately conservative weighted sales prices that are 26% below current market levels the successful completion and sale should result in a Net Tangible Asset value of A$0.23 for end FY2018 and after retained development capital should be able to distribute A$0.15/ share in unfranked dividends.
The IRR would be very high and well over 50%
Details are provided in this
China Industrials Index ETF
China Financials ETF
These are not over extended markets in my view.
In India the picture is much the same. Market has surged but is not over extended given the correction of the past few months. The two main indices are the BSE 30 and the NSE 50.
The Bombay Stock Exchange Sensex Index
And the Nifty Fifty National Stock Exchange Index
The India Fund is seeking to raise a minimum of A$35m and a maximum of A$100m at A$1.00 per share and will have a 1:1 loyalty option (only available to shares purchased in the IPO and held to the entitlement date of 6 months after listing) with strike price of A$1.00 and expiry date of 18 months after vesting.
