Drilling for equity is gaining in popularity as junior explorers look to keep unearthing new discoveries and at the same time conserve cash in a tight market.
Several drillers are getting on board this trend, including Topdrill which has done deals this year with Aurumin (ASX:AMN), Meeka Metals (ASX:MEK), Torque Metals (ASX:TOR) and Brightstar Resources (ASX:BTR), to name a few.
iDrilling Australia is also doing drilling for equity deals, most recently continuing its partnership with junior copper explorer Alma Metals (ASX:ALM).
The drilling contractor agreed to continue its services at Alma’s Briggs Copper Project in Queensland in exchange for shares to the value of $75,000. This follows an initial agreement in late May 2024 under which iDrilling accepted Alma shares to cover $240,000 worth of fees.
Alma Managing Director Frazer Tabeart tells Mining.com.au drilling for equity reflects that the owners of the drilling company also share the company’s view that the share price does not reflect the underlying value of the company’s assets.
“They would not be taking part payment in shares if they did not think it was a good investment,” he says.
“From the company’s perspective, it makes our dollars go further and strengthens our relationship with the drilling company.”
Alma this week completed the first tranche of its placement, issuing 81.3 million shares to raise $610,000. The company has also issued 12.1 million shares at $0.012 each to to iDrilling Australia for drilling undertaken at the Briggs Project from June to September 2024.
The second tranche of the placement to raise a further $140,000 is subject to shareholder approval at the company’s annual general meeting being held next Monday (30 September).
This cash is coming from executive Chairman Alasdair Cooke, non-executive Director Valentine Chitalu and Tabeart.
“Directors have chosen to participate because they recognise a sound investment opportunity with a share price that is (in our opinion) not reflecting the underlying value of the Briggs Copper Project,” Tabeart explains.
“This sends an important message to shareholders that the directors are prepared to invest their own money into the company and are showing their confidence in the investment case by doing so.”
The fresh capital injection is being used to extend the current drill program to improve resource confidence at Briggs and potentially allow the start of a Scoping Study later this year.
The Briggs Copper Project hosts an inferred resource of 415 million tonnes @ 0.25% copper and 31 parts per million molybdenum, for contained resources of 1 million tonnes of copper and over 28.6 million pounds of molybdenum.
Alma, which has a market capitalisation of just over $10.8 million, has also outlined an exploration target for growing the resource, which envisages the potential to add a further 450 million to 900 million tonnes at similar grades.
Write to Angela East at Mining.com.au
Images: Alma Metals
