Far East Gold Ltd (ASX:FEG) became the latest junior Australian mining company to list on the ASX on Monday under the ticker ‘FEG’ - an exploration company with a focus on gold and copper projects locally and in Indonesia.
The company launched its IPO in December 2021, aiming to raise a minimum of $8 million via the issue of 40 million new fully paid ordinary shares, priced at $0.20 a share, up to a maximum of $12 million through the issue of 60 million new shares.
FEG by the numbers
FEG officially rang the bell on Monday morning after raising A$11.73 million from its IPO. Investors quickly piled on, increasing Far East’s share price by 50% to $0.30 within three days.
The top 20 shareholders demonstrated their confidence in the company, snapping up 67% of issued shares. The leadership team itself has a strong 39% stake, a good sign for the longevity of the business.
FEG now has a market cap of approximately $61.5 million, while its pro-forma cash equivalent balance at the end of the 2021 financial year reporting period was A$2.7 million.
“Far East Gold is a company with the right combination of highly skilled people with on-ground experience working on quality projects at the right time,” chair and co-founder Paul Walker said.
“As a junior explorer with advanced and highly prospective projects we are excited to continue our journey towards making Far East Gold a world-class, tier 1, multi-billion-dollar mining company and unlock significant value for our shareholders.”
Far East Gold has budgeted two years worth of activity based on the IPO fundraising, divided broadly (ranges represent minimum and maximum based on IPO funding):
- Permitting: $640,000
- Acquisition: $1.67 million-$1.89 million
- Site fees and ongoing costs: $653,000
- Exploration: $4.73 million-$7.79 million
- Tenement Management: $60,000
The new funds will be used to finalise the acquisition of six projects, three in Indonesia and three in Australia, that are currently under contract.
FEG will also focus on securing necessary permitting and licensing, advancing exploration at said contracted projects, providing general working capital for company operations and accessing equity capital markets, all aided by the added finance.
Targeting copper and gold markets
Copper took a hard hit in 2020 but reached an all-time high of over US$10,700 per tonne in May 2021 before falling to a more sustainable but still respectable price, trading at an average of US$9,000 per tonne for most of the 12 month period.
Copper has resurged in relevance recently due to its applications in the electric vehicle and energy storage sectors, with some analysts predicting demand will continue to grow.
Those forecasts appear to be materialising, as the spot price of copper currently sits at $10,349 per ounce.
In 2021, the global copper market size was US$230.05 billion, projected to rise at a compounding annual growth rate (CAGR) of 5.1% to US$325.86 million by the end of 2027.
Gold has followed the opposite trajectory, surging in 2020 to an all-time high of US$2,058.40 per ounce before falling to lows around US$1,700 late last year.
Today, gold is pushing US$1,923.52 per ounce, rising again as geopolitical instability and high inflation push investors toward safe-haven securities.
Far East Gold means to assert itself in both markets, holding multiple copper and gold assets across Australia and Indonesia.
In Indonesia:
Woyla Copper-Gold Project: Adjacent to Baru Gold’s large deposit at Miwah, which contains 3.1 million ounces of NI 43-101 compliant (Canadian standard) gold resource and 8.85 million ounces of silver. Far East Gold has secured the right to acquire 80% economic interest in the Woyla project.
Trenggalek Copper-Gold Project: 12,813 hectares highly prospective for island arc-type epithermal and porphyry-related gold and base metal deposits with 17,786 metres of drilling completed. Far East Gold has secured the right to acquire 100% economic interest in the Trenggalek project.
Wonogiri Copper-Gold Project: A JORC 2012-compliant resource estimate of 533,000 ounces of gold, with a cut off 0.5g/t at the Randu Kuning deposit.
This also equates to 996,500 ounces of gold and 190 million pounds of copper, or 1.15 million ounces gold equivalent with a cut off 0.2g/t. Far East Gold has secured the right to acquire a 100% economic interest in the Wonogiri project.
In Australia:
Hill 212 Gold Project: Secured through an up-front earn-in agreement with Ellenkay Gold Pty Limited which grants Far East Gold the ability to acquire up to a 90% economic interest in the project.
Located in the highly prospective Drummond Basin, where a 2.5-kilometre epithermal gold vein and breccia deposit has been identified with exploration drilling.
Blue Grass Creek Gold Project: Another up-front earn-in agreement with Ellenkay gives FEG the right to acquire up to a 90% economic interest in the project.
The project directly adjoins the Hill 212 tenement and early-stage exploration activities indicate an extension of the Hill 212 epithermal gold vein and breccia deposits into this tenement.
Mount Clark West Copper-Gold Project: In line with the other Australian projects, FEG has secured the right to acquire up to a 90% economic interest from Ellenkay.
The site is in the Connors Arc with data identifying a potentially large-scaled porphyry system coincident with copper-gold-molybdenum chemistry. Four holes drilled for 1,283 metres suggest the location is proximal to a mineralized porphyry system.
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The team
The Far East Gold board and management team has a promising track record so far, collectively raising more than $1 billion dollars in finance during their careers.
Paul Walker chairs the board, bringing more than 30 years of industry experience with him. In 2009 Walker was the co-founder and chair of an Indonesian mining company that successfully acquired several exploration assets and brought into operation a coal mine in Kalimantan.
Chief executive officer Shane Menere also brings a wealth of regional experience, having been based in Indonesia for 13 years.
Menere offers more than 25 years of experience in resource and infrastructure projects, 15 years of which were spent working in some of the Asia Pacific’s biggest mines.
Holding the chief financial officer role, Marc Denovan has a strong commercial and financial background gained both in Papua New Guinea (PNG) and Australia.
Denovan was CEO of Ricegrowers Ltd's largest subsidiary Trukai Industries Ltd based in PNG, and before that a director at KPMG where he spent 11 years specialising in business advisory and taxation within the mining and property sectors.
Rounding out the team are non-executive directors Justin Werner and Dr Chris Atkinson, with extensive financial and geological experience respectively.