Aeon’s Queensland copper-cobalt deposit could become too much for majors to resist
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).
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.
There is a long way to go before that is confirmed but a fully funded Aeon is not about to leave us guessing. Next month it kicks off a 30,000m infill and extension drilling program along the 20km of strike along the Fish River Fault prospective for high-grade copper-cobalt zones.
If the in-fill and step-out drill holes return anything like those from the 2017 program, Walford Creek’s status as one of the biggest undeveloped base metals deposits around will take another step up.
Last year’s drilling led to a substantial resource upgrade to 15.7m tonnes grading 1.24% copper and 0.15% cobalt (along with lead, zinc and silver) for 194,000t of contained copper and 24,000t of cobalt from a small section of the prospective strike.
Aeon also reported a separate and flanking cobalt zone of 18m tonnes grading 0.11% cobalt for another 19,500t of the high-priced metal, making for 43,500 tonnes of cobalt all up, firmly plugging Aeon into the boom lithium-ion battery thematic.
Bell Potter, which has raised funding for Aeon in the past, has a just tickled up its Aeon valuation from 48c to 50c. As was the case for Avanco, Aeon’s trading at a discount to valuation will not go unnoticed by any would-be acquirers.
Mind you, the 30,000m drilling program shows the company is out to grow its value with the drill bit and without the help of any M&A mumbles.
To prove we’re not making up the M&A mumbles around Aeon, it is worth quoting Bell Potter analyst David Coates in his Monday valuation upgrade note.
“Walford Creek is already a significant project in its own right. Further exploration success with this drilling campaign has the potential to propel Aeon further ahead of its peers and emerge as a project that will be hard for large, established producers to ignore.”
AML Price at posting:
27.0¢ Sentiment: Buy Disclosure: Held
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