Adventus CEO on building a 
‘premier zinc-acquisition vehicle’

VANCOUVER — Adventus Zinc (TSXV: ADZN) closed its $3-million initial public offering (IPO) in February, with 6 million shares issued at 50¢ each. The company isn’t a typical start-up, however, and is attracting institutional interest in its strategy to become what Adventus president and CEO Christian Kargl-Simard calls a “premier, publicly listed zinc-acquisition vehicle.”

Adventus is the brainchild of mining royalty outfit Altius Minerals (TSX: ALS; US-OTC: ATUSF), which approached Kargl-Simard when he was an investment banker at Raymond James.

Altius is now spinning out its zinc prospects into Adventus while serving in a technical and financing capacity.

“Altius asked me if I’d like to run the new zinc company,” Kargl-Simard says in an interview. “I wasn’t initially that interested because the risk-reward isn’t typically there for grassroots exploration, but we worked on the business plan last year and decided we’d use those assets as a basis to go public.

“They are excellent properties, but we also outlined a complementary strategy where we position ourselves to become a zinc-acquisition vehicle that could mobilize institutional capital. For that to work, we really needed to establish credibility, so everything we’ve done to date has been about achieving that.”

“People have to look at exploration [in Ireland] through a different lens,” president and CEO Christian Kargl-Simard. Credit: Adventus Zinc.

The company now has 45.6 million shares outstanding, with Altius holding a 34% stake alongside Resource Capital Funds and U.K. private equity firm Greenstone Resources, which each hold 18% equity interests.

The company has $10 million in treasury, but its shareholders are said to be willing to invest more cash for the right acquisition.

“With such strong and well-funded investors, I feel confident going into a situation with major mining companies and having a strong starting position for negotiations,” Kargl-Simard says. “We’re focused on stable political jurisdictions where we can benefit from infrastructure, and we’re only really interested in sulphide zinc resources.”

Adventus is looking for zinc deposits in Australia, the Americas and Europe that are capable of supporting 100,000 tonnes of annual zinc production over more than a 10-year mine life. Transactions could range from an earn-in to straight acquisition for cash, shares, promissory note, royalties and/or milestone payments.

“Most publicly listed junior developers have projects with significantly lower production potential, and the ability to scale output is important in appealing to institutional investors,” Kargl-Simard says. “Most of the opportunities we’re looking at are within major companies or held privately.”

The company has a list to 30 potential deals and hopes to close at least one transaction within the next 12 months.

Meanwhile, Adventus will spend $2 million exploring large properties inherited from Altius in Ireland and Canada.

The Irish assets are headlined by the 240 sq. km Rathkeale and 200 sq. km Lismore projects. The country hosts Boliden’s (UT-OTC: BDNNF; STO: BOL) Tara underground mine, which is Europe’s largest zinc operation. Adventus now controls the second-largest licence portfolio in Ireland.

Operators at Boliden AB’s underground Taras zinc mine in Ireland. Credit: Boliden AB.

The Rathkeale block has what Adventus considers a promising structural setting and extensive alteration, including dolomitization and black matrix breccias in historic drilling, which indicate a large hydrothermal system within the area. The property sits next to Glencore’s (LON: GLEN) Pallas Green deposit, which hosts 44 million inferred tonnes grading 7% zinc and 1% lead.

Adventus plans to spend nearly US$1 million on work programs at Rathkeale in 2017, which will include advanced geochemistry and seismics to systematically test the trend to follow up on over 40,000 metres of previous drilling.

“Ireland tends to require what we call ‘blind exploration,’ and geochemistry isn’t particularly useful,” Kargl-Simard says. “People have to look at exploration there through a different lens. We’re approaching it with the understanding that seismic techniques have proven effective, which is a technology well established in the oil and gas industry. Many of the majors left Ireland over the past five years or so, and Altius had been picking up what it thought were the best properties.”

Raymond Keenan, Adventus Zinc prospector and senior field technician, sampling oxidized sulphides in County Galway, Ireland.  Credit: Adventus Zinc.

In Canada Adventus controls 220 sq. km surrounding the historic Buchans volcanogenic massive sulphide  deposit in Newfoundland. Altius consolidated the land position in 2014 and will continue to provide exploration and technical services.

“The projects we have are generally more grassroots, but they all have big potential. We’re focused on a real possibility for finding something of size,” Kargl-Simard says.

A global zinc supply reduction started in mid-2013 when Glencore closed its Brunswick mine in New Brunswick, and then Chinese state-owned Minmetals closed the large-scale Century operation in Australia in 2015.

Furthermore, Vedanta’s (NYSE: VEDL; LON: VED) Skorpion mine in Namibia is expected to cease operations by 2020.

Dundee Capital Markets estimates the shutdowns could remove 1.6 million tonnes of zinc in concentrate production, which equates to 14.5% of global supply.

“On the demand side, zinc is a pretty boring story. Most of the production goes toward galvanized steel for vehicles, and the demand-side growth in terms of new uses isn’t exactly booming,” Kargl-Simard says.

“But there’s no substitution for zinc, and the real driver for a longer peak cycle is that over the past few years there has been that decline in zinc production. We’re talking about major mines that have been in production for many decades. Given the lack of investment we’ve seen over that time, there’s a situation brewing here, and the market is going to need larger development projects.”

Adventus shares began trading on Feb. 9. The company has a fully diluted 47.9 million shares, and shares last closed at 88¢.