Raisebook

Montem Resources is seeking to become Canada’s next coking coal supplier
Montem Resources
Montem Resources
ASX:MR1
  • Excellent opportunity to invest in high quality, large scale, Canadian metallurgical coal developments
  • High quality steelmaking coal. Previously mined and in close proximity to key mines of Teck Resources
  • Significant resource: JORC compliant Mineral Resources across four projects totalling 163Mt
  • Experienced board and management - extensive coal experience in Canada and Australia
  • Funds raised will be used to update and confirm coal resources and coal quality
Raise Amount
$20,000,000
Offer Price
$0.5000
Closes
Nov 21, 2018

Montem Resources published a Fourth Supplementary Prospectus dated 17 October 2018.

The Fourth Supplementary Prospectus supplements the Replacement Prospectuses dated 14 August 2018, as supplemented by the First Supplementary Prospectus dated 21 August 2018 and the Second Supplementary Prospectus dated 14 September 2018 and the Third Supplementary Prospectus dated 5 October* (together, the Replacement Prospectus) as issued by Montem Resources Limited and lodged with the ASIC on those dates.*

The Fourth Supplementary Prospectus must be read in conjunction with the Replacement Prospectus - together these documents form the Disclosure Documents of the Offer.

The Closing Date of the Offer has been extended to 21 November 2018.

A revised indicative timetable is below.

Montem Resources is a coal mine development company with metallurgical coal properties in south-western Alberta, Canada, known as the Chinook Properties.

These properties are located in an active mining district and in close proximity to key mines of Teck Resources (NYSE: TECK), which is a major producer of Canada’s coking coal.

The Chinook Properties have JORC compliant Mineral Resources across four separate projects totalling 163Mt (130Mt Indicated, and 33Mt Inferred).

Four of the properties contain previous open-cut and underground mines.

Extensive local infrastructure in the Crowsnest Pass region provides a strong platform for rapid and low cost development of the Chinook Properties.

Montem Resources’ primary objective is to re-establish mining at the Tent Mountain mine, whilst exploring and evaluating the development potential at the other Chinook Properties.

The Company has brought together a team of technical and management specialists with extensive experience in coal mining in Canada and Australia, led by Peter Doyle and Bob Bell.

Mr Doyle has over 20 years’ experience in the coal industry including roles in production, project development, marketing and management. He has been involved in successful greenfield and brownfield coal mine developments, and managed coal mines selling to export metallurgical markets.

Mr Bell is a mining engineer with 30 years’ experience in the Canadian coal industry and international coal markets. Previous experience includes executive roles with Teck Resources coal division and Luscar.

Following the offer, the company will carry out pre-development drilling to enable a definitive feasibility study (DFS) at Tent Mountain, and apply for an amendment to the existing environmental approval.

The company will also apply for necessary licences at Tent Mountain to re-establish mining operations. It is expected the DFS and various licence applications will be completed within a year of completing the offer.

The Company will also conduct limited exploration in 2019 at other Chinook Properties in preparation to produce a preliminary economic assessment of each Project to underpin development planning.

The Offer

Montem Resources Ltd (ACN 623 236 831) is offering up to 40 million new shares at an issue price of $0.50 per share to raise up to $20,000,000.

RFC Ambrian is the lead manager of the offer.

The offer of the securities are made in, or accompanied by, a copy of the disclosure document which can be obtained by clicking on the "ACCESS DISCLOSURE DOCUMENT" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

Before making an investment decision, potential investors should read the Disclosure Documents entirely, and seek professional financial advice.

The business of mineral exploration, project development and mining, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on many factors. There can be no assurance that activities will result in the discovery of an economic mineral deposit.

New Share Placement

The Company has on 4 October 2018, issued 1,000,000 Shares to Merrill Lynch (Australia) Nominees Pty Ltd <Regal Emerging Companies Fund II> at $0.30 per Share raising funds of $300,000 for general administration and working capital purposes.

Key Offer Statistics

Key Offer Statistics Min Subscription Max Subscription
Offer Price per New Share $0.50 $0.50
Total number of Shares on issue (other than Shares offered under this Prospectus) 72,541,458 72,541,458
New Shares offered under this Prospectus 30,000,000 40,000,000
Total number of Shares on issue upon listing on ASX 102,541,458 112,541,458
Options on issue at the date of this Prospectus 4,086,667 4,086,667
Performance Rights on issue at the date of this Prospectus 3,000,000 3,000,000
Amount to be raised under the Offer $15,000,000 $20,000,000
Undiluted market capitalisation at the Offer Price $51,270,729 $56,270,729

Important Dates

General Offer Closing Date 21 November 2018
Allotment of Shares (Completion of Offer) 27 November 2018
Expected date for despatch of Holding Statements 28 November 2018
Shares expected to be trading on ASX (on a normal settlement basis) 4 December 2018

* The above dates are indicative only and may vary.

Investment Highlights

  • Experienced Board and management: extensive coal experience in Canada and Australia
  • Significant resource: JORC compliant Mineral Resources across four Projects totalling 163Mt (130Mt Indicated, and 33Mt Inferred Mineral Resources)
  • High quality steelmaking coal: the most recent production from Tent Mountain from the early 1980s was sold primarily to Japanese steel mills
  • Previously mined: four of the Chinook Properties have been mined previously in the 1960s and 1970s, with Tent Mountain closing in 1983
  • Approvals: Tent Mountain mine has a current environmental approval, however an amendment to the environmental approval is required to restart mining as are requisite additional mine operating licences
  • Nearby infrastructure: 10km or less to mainline rail network linking the Chinook Properties to ports
  • Exploration upside: Potential for resource extension through exploration activities

At the same time, the business, assets and operations of the Group are subject to certain risk factors that have the potential to influence operating and financial performance in the future. These risks can impact on the value of an investment in the New Shares. These risks are summarised in detail in Section 8 of the Disclosure Document.

The Chinook Properties

Four of the properties have been previously mined, and two of the properties are greenfield exploration areas.

A brief description of each property is:

  • Tent Mountain — An area that includes a previously operating mine, with 45Mt (37Mt Indicated; 8Mt Inferred) of coal resource;
  • Chinook South — A previously mined area with 48Mt (38Mt Indicated; 10Mt Inferred) of coal resource;
  • Chinook North — A previously mined area with 43Mt (31Mt Indicated; 12Mt Inferred) of coal resource;
  • Vicary-Racehorse — A previously mined area with 27Mt (24Mt Indicated; 3Mt Inferred) of coal resource; and
  • Isola & Oldman — Two greenfield exploration areas with minimal historical exploration and evidence of multiple coal seams present across the area.

Why is the Company seeking to raise funds?

The purpose of this Offer is to raise funds to:

  • pursue the Projects as described in the Prospectus;
  • conduct feasibility and environmental studies at Tent Mountain;
  • conduct exploration activities across all Chinook Properties;
  • to apply for necessary mining licences and environmental permit amendments for Tent Mountain;
  • meet existing costs and liabilities of the Group, including the costs of the Offer, the GTG Loan and the WCC Payment; and
  • pursue other strategic exploration or production opportunities should they arise.

Industry Overview

Montem Resource’s properties contain metallurgical coal. Metallurgical coal is used in steelmaking.

Recent growth in global steel use has been driven by industrialisation in China. Future growth is expected to be driven by developing countries, particularly India.

Global steel production is dominated by China, at over 800Mt crude steel in 2017. Although China is mostly self-sufficient in coal supply it is still a major importer of coking and other metallurgical coal, forecast at ~60Mtpa through 2017-2023.

India is expected to become the second largest steel producer in 2018, with most steel consumed domestically, underpinned by urban development, government investment and manufacturing expansion. India has abundant iron ore but limited metallurgical coal deposits, which are mostly of poor quality. Hence, India relies on imports and is expected to become the largest metallurgical coal importer, potentially by 2019.

Australia is the largest exporter of coking coals (~60%), with USA and Canada also important (IIS). Canada exports almost 30Mtpa of coal, primarily hard coking coal, with the key markets being: Japan (24% in 2016); South Korea (20% in 2016); and, China (16% in 2016) (Natural Resources Canada, Coal Facts, March 19, 2018).

Whilst historic production at Tent Mountain mine and Vicary-Racehorse was sold as hard coking coal to Japan, there is no certainty similar hard coking coal products will be produced from any of the Chinook Properties. Further drilling and sample testing will be required to confirm whether a soft, semi-soft/weak, semi-hard or hard coking product can be produced.