Aeon’s Copper-Cobalt Deposit Could Become Too Much For Majors To Resist

By Barry Fitzgerald | More Articles by Barry Fitzgerald

The imminent drilling program to expand existing Walford Creek resource will be keenly watched by growth-hungry mid-tiers.

OZ Mineral’s premium-busting $442 million agreed takeover bid for ASX-listed Brazilian copper and gold producer/developer Avanco has got the pundits wondering if OZ’s move signals more acquisitions of the juniors by the mid-tiers to secure growth opportunities are on the way.

That OZ was happy to pay a 116% premium to snare Avanco with its suite of Brazilian production and developments assets was as sure a sign as there is that growth is back on the agenda for the cashed-up mid-tiers.

M&A activity is of course not without its risks. But executed properly, it is the sure-fire way to replenish project development pipelines in a hurry. In the case of the Avanco acquisition, OZ potentially goes from a one-mine operator (Prominent Hill) to a seven mine operator in half-a-dozen years.

The question now is who might be next amongst the juniors in the ASX space to attract the attention of a growth hungry mid-tier?

There are dozens of them in the gold space, but not so many in the base metals space.

One name that does crop up as a likely future target is Aeon Metals (AML). It is trading at 27.5c for a market cap of $164m (there are also 85m vendor warrants with a 16c strike price expiring in December next year).

Aeon owns the Walford Creek copper-cobalt-zinc project in north-west Queensland which it acquired in 2014 from the receivers to the unlisted Aston Metals, the base metals exploration arm of Nathan Tinkler before the former electrician’s coal and horse racing empire came crashing down.

Explored by Western Mining Corporation (now part of BHP) between 1986 and 1994, and several other groups before Aeon came along, Walford Creek’s status as a development candidate has soared in recent times.

A new geological model that enables drilling to be targeted to higher grade zones and the delineation of the highest-grade “significantly” sized cobalt deposit in the country, has the company talking itself about Walford Creek being world-class.

Plus, David Flanagan’s Battery Minerals secures its mining licence, putting it on track for graphite production later this year. Read more +

Barry Fitzgerald

About Barry Fitzgerald

Barry Fitzgerald has covered the resources industry for 30 years. His column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age.

View more articles by Barry Fitzgerald →