Cloudbreak Discovery, which is set to arrive on the Standard List of the London Stock Exchange shortly, will be one of only two prospect generators in the mining space listed in the UK.
The Canadian connection is no coincidence since prospect generation is largely a Canadian model, nurtured effectively by the strong home grown greenfields exploration activity generated in-country.
Prospect generators identify new unexplored resource prospects, either on virgin ground or inside underutilised portions of ground that has already been staked by companies with bigger fish to fry. It has both been an effective model for many juniors over the years and made a fortune for many an aspiring exploration geologist too.
However, the space is a little crowded in Canada these days which is one reason why Cloudbreak is seeking a listing in London.
Cloudbreak’s path to the Standard List has involved a few twists and turns, as chief executive Kyler Hardy explains.
“This whole thing was started in 2015,” he says.
“Through various iterations it became the strong resources platform named Cloudbreak. We had varied energy projects in the Middle East and North America, however, ended up focussing on the mining prospect generation model. We have done over 70 transactions privately over the last 10 years.”
It is this depth of expertise and track record that makes Cloudbreak stand out from the get-go. Some companies come on to the Standard List without a substantial asset base, using the allowable time-window and some promises to reassure investors that something meaningful will result.
With Cloudbreak it is not like that at all. The company is already rolling when it comes to prospect generation, and has been for many years.
Thus, the company has in its portfolio already, primarily: helium in Alberta, industrial minerals near Vancouver, titanium and iron ore in Quebec, silver and copper in northern British Columbia, lithium and nickel in eastern Canada, as well as a significant exposure to bauxite in Africa, via a stake in Anglo African Minerals.
Note the lack of focus on precious metals in that list. This is deliberate and again marks the company as unique, at least in London. Whereas Altus is largely focused on gold and precious metals assets in West Africa and elsewhere, Cloudbreak is focuses far more on opportunistic markets such as specialty gases, industrial minerals and the battery metals.
This is a prospect generator with a keen eye for the metals and commodities of the future.
“We are looking for things that are used,” says Hardy.
“We are Canadian and we operate in the Canadian markets on a pretty regular basis. But as we move forward, we see the opportunity really lying outside of the borders of North America as we start to scale this thing and start to grow it.”
In the immediate term, that vision beyond the normal horizons means Africa and the Middle East, which in turn gives a sensible context to the London listing, since so much Africa and Middle East capital markets expertise is located there.
“We see huge upside potential in Africa,” says Hardy.
“The amount of mineral wealth there is significant. We particularly like West Africa, around Guinea, Ivory Coast, Senegal, and Burkina Faso.”
But what is his version of prospect generation, and how will it work in practice?
“We look at early-stage, grass roots projects, with maybe a couple of drill holes, or nothing if it is a big idea. We go through the portfolios of majors and utilise our datasets to transact with larger companies and small-scale operations alike.”
After that, the idea is to work the given project up, spin it out into a new vehicle, and distribute the equity in the new vehicle to existing shareholders. Kyler Hardy and his team have done this many times on a private basis, however, bringing their expertise to the London public markets is a step up in their ambitions.
“In this company we have generated nine projects, put C$1.5mln in, and delivered in excess of C$23mln in value subsequently,” says Hardy.
But he is mindful too of an old industry maxim he heard from an experienced hand some years ago: “the definition of a successful prospector is that it doesn’t hold any assets because it has sold them all.”
The idea is to work them up, move them along, monetise them, and then look for the next one.
So, what will the next round of deals look like? Hard to say, as the industry is moving fast at the moment. However, Hardy is keeping his eye on industrial minerals and fertilizers.
“I would say you will see half a dozen property transactions within the next six months,” he says.
Watch this space.