Mrkt BUZZ Arctic Minerals: Continued exploration at Bidjovagge
12 aug 2021
Read the entire commentary here:
Continued exploration at Bidjovagge
On August 6 2021, Arctic Minerals communicated that they will seek an extension of five out of nine extraction permits, which are about to expire in 2021. The company has also been granted six new exploration permits, where, among other things, geophysical exploration will be conducted. The company also intends to update its mineral resources, which is done by an external specialized consultant company.
In our initial coverage, we valued Bidjovagge as the second most valuable asset of Arctic Minerals, close in value to Peräpohja (the joint venture with Rio Tinto), though Finland is of course the area of focus for Arctic Minerals. It is a problematic asset in that the municipality of Kautokeino, where Bidjovagge is located, has redefined the zoning of Bidjovagge into use for “Agriculture, Nature, Leisure and Reindeer husbandry”. So even if Arctic Minerals can be granted extraction and exploration permits from the central mining authority in Norway to do exploration, they cannot proceed to the construction of a mining as long as the municipality is obstracting the process. Still, we interpret the company’s decision to not just to seek to prolong the extraction permits that are about to expire, but even to make further explorations in adjacent areas as a positive sign. We also believe that the potential value of the project is so large that Arctic Minerals cannot simply abandon it.
The company intends to seek a partner for the project. In order to construct a mine the company planned to raise SEK 400m (EUR 40m) in 2013. At present, this does not seem a realistic scenario to us. Therefore the company will depend on a partner for the capital and skill in planning and constructing the mine. A prerequisite for a sale or some kind of commercial deal is the change of the zoning of Bidjovagge so that the construction of a mine is permitted. The company needs to convince the local politicians of the positive facets of a new mine, such as new employment opportunities and an improved economy. A partner that is used to dealing with regulations and governments might also be a useful ally in this respect. The municipality can reverse its previous decision to change the zoning at its own discretion (local elections are due in 2023), which would enable the construction of a mine.
Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, conducts business with regard to Corporate Finance and Equity Research in which areas it, among other things, publishes information about companies including analyzes. The information has been compiled from sources that Carlsquare considers to be reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be regarded as a recommendation or invitation to invest in any financial instrument, option or the like. Opinions and conclusions expressed in the analysis are intended only for the recipient.
The content may not be copied, reproduced or distributed to another person without the written approval of Carlsquare. Carlsquare shall not be held responsible for any direct or indirect damage caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments provide opportunities for value increases and profits. All such investments are also subject to risks. Risks vary between different types of financial instruments and combinations of these. Historical returns should not be considered as an indication of future returns.
The analysis is not directed to U.S. persons (as defined in Regulation S of the United States Securities Act and interpreted in the United States Investment Company Act 1940) nor may it be disseminated to such persons. The analysis is also not directed to such natural and legal persons where the distribution of the analysis to such persons would result in or entail a risk of a violation of Swedish or foreign law or constitution.
The analysis is a so-called Commissioned Research Report where the analyzed Company has signed an agreement with Carlsquare for analysis coverage. The analyzes are published on an ongoing basis during the contract period and for a usual fixed remuneration.
Carlsquare may or may not have a financial interest in the subject of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.
The analyst Richard Ramanius does not own and is not allowed to own shares in the company analyzed.