Smallcap former potash miner Danakali Ltd (ASX:DNK) is going to move to the National Stock Exchange (ASX:NSX).
This, management says, is because it doesn’t want to be forced to spend money on exploration under an ASX Listing Rules asset test.
First, some context: Danakali has been suspended on the foremost bourse since 2023 after it sold off its interest in a Eritrean project to a Chinese company.
That left Danakali as a miner without a project. The stock was suspended thereafter, and now, the company is still waiting to find a good investment in which to sink money.
But it doesn’t want to be forced to pick up a project for the sake of it, which is the ultimate choice the company must make if it wants to resume trading on the ASX.
So, having liaised with the ASX itself, the company is now moving across to far smaller competitor NSX. Its ASX shares will be delisted.
For those out of the loop, the NSX is a relatively recent bourse started up in Australia, a separate competitor, kind of like Chi-X. The NSX is itself also listed on the ASX.
(Its small nature, at this time, reminds this finance journalist of the PNG stock exchange.)
But for a company seeking to retain its cash – which is, to be fair, indicative of a financial discipline often valued by shareholders – the move makes a flavour of sense.
“There was no case for committing more than $15m to exploration over the next two years, as required under the ASX Listing Rules, when the funding requirement for the projects we are contemplating is far lower,” Danakali Chair Seamus Cornelius said.
Danakali on Tuesday noted it is considering projects back in Eritrea; in Saudi Arabia, and, in Australia.
“After lengthy and careful consideration, we concluded that transition to the NSX was in the best interests of Danakali and our investors,” Cornelius added.
“Simply, it would have been an imprudent use of shareholders’ funds. We don’t need to spend money at those levels to test and advance these projects.”
The company had $39M in cash at the end of September and reported on Tuesday it has the lion’s share of those funds left to subsist on.
DNK last traded at 31.7cps.
Join the discussion: See what HotCopper users are saying about Danakali and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
