Kalamazoo plans ASX listing

A local gold company founded by prominent prospector Denis O'Meara hopes to begin trading on the ASX by the end of next month after completing a $10 million initial public offering.

Kalamazoo Resources’ flagship asset is its Snake Well gold mine in the Murchison region, which it acquired from iron ore-focused miner Atlas Iron in 2013.

Kalamazoo undertook a mining program at Snake Well during the 2016 financial year, with the ore trucked by road 220 kilometres for processing and production at a facility owned by Chinese company Minjar Gold.

The production trial generated $5 million in revenue for FY16.

Kalamazoo also owns a 51 per cent stake in the Cork Tree copper project in the Doolgunna region, close to Sandfire Resources’ DeGrussa copper mine.

Atlas holds the remaining 49 per cent interest, with Kalamazoo holding the option to increase its stake in the project to 80 per cent under the current terms of the joint venture.

Mr O’Meara was a founding director of Kalamazoo, but no longer sits on the company’s board.

He retains a minority stake in the business.

Kalamazoo has engaged DJ Carmichael to raise $10 million from its IPO, with 50 million shares up for grabs at an issue price of 20 cents each.

Upon listing, it expects to hold a market capitalisation of $21.6 million.

“We had a very successful trial mine and production, and we have another project that does require some more pre-development work, but while we could do that incrementally, take our time about it and use our own cash flow from our private investors, we’ll be able to do it so much faster and more efficiently, and grow the company in a much better way if we get some investment funds,” Kalamazoo managing director Peter Benjamin told Business News.

“Of the $10 million we’re going to raise, $6.7 million is going directly into the ground, and (exploration manager) Lance Govey has developed an exploration and development budget for two years.

“Just under $6 million is going into Snake Well to test four principle targets to try and expand that resource base, while just under $500,000 is going into Cork Tree, and we’ve allowed $300,000 to $350,000 for project generation to develop new opportunities.”

Kalamazoo is chaired by Luke Reinehr, with SA Capital Funds Management managing director Angus Middleton sitting on the board as a non-executive director, and Impact Minerals chief financial officer Bernard Crawford serving the same role at Kalamazoo.

The company hopes to begin trading on the ASX by November 25.