Friday, February 25, 2011

Tantulum & Niobium - Australian-American Mining (AIW)

After reading about the EU 14 critical mineral raw materials report and posting about it the other day I've become really interested in these materials.  It's resulted in me casting my eye over some of the ASX listed companies with an exposure to each of them.

One of the companies that has caught my attention is Australian-American Mining Corporation Limited (AIW).  I will firstly state that the company is focusing on it's uranium assets in the US.  This isn't a bad thing - the outlook for uranium in my opinion is very good and I'm almost on the verge of calling myself a uranium bull.  Having said this, it is the specialty metals project in Arizona that has the potential for lithium, tantulum, niobium and rubidium which has piqued my interest.

The company has a lot going for it including an excellent cash backing of $7.127 million which means there will be no capital raisings and share dilution any time soon.  They are also holding 3 million shares of Forge Resources (FRG) worth $4.08 million.  That's a total of over $11 million in enterprise value (EV) not including all of their uranium, gold or rare earths projects - all this for a market cap of $23 million.

Anyway, back to the specialy metals project.  The project acquired in November last year was done so via cash and scrip (shares).  The cash amount was a nominal $25,000 whilst the scrip component was 3,000,000 shares.  I always like to hear that the seller of a project is to receive stock.  Why?  This confirms that they still want some skin in the game and to have exposure of upside to the project indirectly by holding stock.  AIW believes that the project has the potential to be of a large scale and with significant grades.  They have also been able to access a large database of previous work which will help in targeting key areas.

AIW is intending to list on the TSX in March this year which is significant news.  North American investors will value the projects of this company much higher than their Australian counterparts and this could result in a rerating of 8 - 10 times!  I expect a nice appreciation in the share price in the lead up to this listing.  If experience is anything, Prima Biomed (PRR) and it's listing on the NASDAQ was one test case (recommended at $0.125 in October, see post)

AIW shares spiked $0.009 to $0.073 today on very good volume of 9.2 million units.  The market is awaiting drilling results on it's Apex uranium project so trading suggests this will be announced soon or there is some other newsflow around the corner.

1 comment:

  1. I like your analysis. You might be interested in the chart...