Hi all, I took a bit of time out yesterday to write an insight for the Marcus Today newsletter and it was published this morning. I probably could have gone into a bit more depth into the Company and its prospects but it was an insight not a research report. Insight below. Cheers.
Ausquest Limited (AQD), is a mineral exploration Company which has a number of quality potential targets that are of both local and international nature. One of the most interesting and unique things about Ausquest is that it is partnered with international miner South32 via an agreement that both companies signed in February 2017 known as the Strategic Alliance Agreement (SAA). Basically, in this agreement Ausquest presents it's projects which they consider of high value to South32 and it goes through a staged evaluation process in which they are classified as "exploration opportunities" or "drill ready opportunities". If South32 assess a project as an exploration opportunity, a work program and budget is agreed by both parties and South32 makes payments of anywhere between US$250,000 and US$500,000 to Ausquest to fund the project. When a project is accepted by South32 as a drill ready opportunity, Ausquest prepares a drill program and budget for the project and if S32 accepts, a joint venture for the project is formed. Under agreed terms of the joint venture South 32 has to contribute US$4 million of initial funding to earn a 70% interest in the project and can earn up to 80% interest in the project if they complete a pre-feasibility study. The SAA with South32 currently expires 31st December 2019. From the last quarterly report, there are 2 copper-gold prospects in Peru that are going through the drill permitting stage under the SAA. The other project in the SAA is the Billy Blue Zinc Project in Western Australia which has had reconnaissance drilling performed and further work is now being considered by the alliance to test the target. In January 2018 the cash position of the Company is around A$1.6 million with a market capital of roughly A$11 million. In my opinion it is an extremely attractive play that is significantly under appreciated by the market as the SAA is 1 year in and a lot of projects have been advanced and are being considered for potential JV's / exploration opportunities. Ausquest also has minimal cash burn as well as South32 are predominately funding most of the cost. Definitely one to consider for the "risk-on" investor, especially as Peru will be kicking off this year.
AQD Price at posting:
1.8¢ Sentiment: Buy Disclosure: Held
