Company Overview

Dundas Minerals Limited (ASX: DUN) is an Australia-based exploration company incorporated on April 21, 2020. The main objective of the company is to identify opportunities to acquire or make application for exploration licenses within areas of Western Australia that are considered prospective for the occurrence of nickel and gold deposits.

Initial Public Offering

The company had launched its IPO on the Australian Securities Exchange (ASX) on September 27, 2021, under the ticker DUN and had sold approximately 30,000,000 shares at $0.20/share. We had covered this IPO in our ‘Kalkine IPO Report’ on October 06, 2021 and concluded that this IPO was “Attractive” given its presence in the EV battery metal space, aggressive growth outlook and the firm underlying commodity prices.

 Daily Price Chart (as on January 20, 2022). Source: REFINITIV, Analysis by Kalkine Group

Conclusion

Investors who have invested into this IPO can consider ‘Exiting’ from their position at the closing price of $0.20 as on January 20, 2022, given:

Increasing rate hike scenario: Give the heightened inflationary pressure across the globe, rate hike from the US Federal Reserve is eminent. An increase in the rate hike will have an adverse impact on the gold prices, as gold is inversely proportional to interest rate.

Supply chain bottlenecks: Given the rapid spread of Omicron variant of Covid-19 across the globe, supply chain bottlenecks have again resurfaced. Companies are facing containers shortage and steep rise in shipment costs.

Inflationary pressure: The cost of mining has significantly increased on the back of heightened energy prices, increasing shipping cost, among others. For small-size companies, higher inflationary pressure could be detrimental for their growth.

*The reference data in this report has been partly sourced from Refinitiv.