Orpheus Minerals is poised to capitalise on the growing uranium demand as the newest exploration company to list imminently on the Australian Securities Exchange (ASX) targeting the nuclear fuel.
Managing Director Simon Mitchell told Mining.com.au on the sidelines of the International Mining and Resources Conference (IMARC) in Sydney last week that the company’s initial public offering (IPO) comes amid an environment where uranium supply from stable jurisdictions – such as Australia – is currently in structural decline.
“Uranium market fundamentals are sensational at the moment. This sector is really going to go off and I really believe that strongly and we’re really just setting ourselves up for a major shift towards nuclear power.
This is playing out not just in certain countries but it’s playing out all through the Western world. You can see it with gas prices, and you can see it with electricity prices, it’s sending us a signal. At the moment it’s a signal of higher prices but in the future, we’ll see it as fragilised risk with prolonged blackouts and the like.
“There’s a big storm brewing and I think people have really underestimated just how much uranium is going to be required going forward”
There’s a big storm brewing and I think people have really underestimated just how much uranium is going to be required going forward.”
The MD told Mining.com.au that the mid to long-term outlook on global demand for uranium is forecast to increase. It is anticipated to come mostly from regions such as the US, Europe, or North Asia, where uranium is used in the production of zero-emission power, which means that it does not directly produce carbon dioxide during electricity production, and where nuclear generation is considered a viable option to meet increasing energy needs in a world where many governments are seeking to shift from carbon intensive energy sources.
In addition, the ability of the existing supply sources of uranium around the globe to meet the anticipated increase in demand remains uncertain.
As a “dedicated, uranium-focused company focused on South Australia and Northern Territory”, Orpheus’s upcoming IPO is one of the very few focused on uranium (U3O8) in recent times.
Mitchell explained at IMARC: “We’re what’s called an unconventional spinout of Argonaut Resources and we’re in the middle of the offer period right now. Argonaut shareholders have a priority offer, which they can accept up until next Tuesday (8 November) and then after that we have a general offer and then the broker offer.”
Under the prospectus, the MD noted that Orpheus is seeking to raise $6 million via the issue of 30 million shares at an offer price of $0.20 per share, giving the company a market capitalisation of just over $11.14 million. The offer opened on 25 October and the company’s shares are expected to begin trading on the Australian bourse on a normal settlement basis on 29 November under the ticker code ‘ORP’.
Lead manager of the Orpheus IPO is Taylor Collison.
The company is currently an Australian unlisted public company, incorporated on 21 August 2020 by its current parent company Argonaut Resources (ASX:ARE). Following a strategic review of its assets, Argonaut decided to demerge its uranium exploration projects via an IPO, which is considered to be a partial, non-standard spin-out. Argonaut received shareholder approval for the demerger on 30 September 2022.
Orpheus’s objective is to explore for and discover greenfield uranium deposits of economic grade and scale in South Australia and the Northern Territory. Its focus is on sandstone or sediment hosted and unconformity (hard rock) uranium deposit types as these are typically higher grade or more simply extracted.
Currently, South Australia and the Northern Territory are the only 2 states or territories in Australia which allow uranium mining. However, the MD noted that that might change in Western Australia and Queensland down the line in terms of the legislation.
“But that could be 5 years, it could be 7 years, it could be 10 years, I mean who knows.”
The company’s strategy is to explore for and discover greenfield uranium deposits of economic grade and scale in South Australia and the Northern Territory, which are jurisdictions that presently include approved and operating (or recently operating) uranium mines and which are responsible for the production of 4,192 tonnes of uranium in 2021, or approximately 8.7% of total world production.
The company’s early stage portfolio includes the Frome Project in South Australia, located in the Frome Embayment which is a globally significant location in terms of discovered economic sandstone hosted uranium deposits; the Cummins Project in South Australia, where it is targeting structurally controlled sedimentary hosted uranium; and the Mount Douglas Project in the Northern Territory, which has strong geological parallels with the famous uranium rich Alligator Rivers region but which has been significantly under-explored in comparison.
Mitchell told this news service that Orpheus has assets in regions with the “right legislation and the right geology, so it ticks all the boxes”.
Argonaut holds just over 15 million shares in the company, being 67% of its issued Shares as at the date of the prospectus. The company conducted a pre-IPO capital raise on 29 October 2021, under which 7.4 million shares were issued at $0.05 per share to certain investors who collectively hold the remaining 33%.
Settlement of the offer is expected on 22 November 2022.
Write to Adam Orlando at Mining.com.au