Constellation Resources Limited (Proposed ASX Code: CR1)

Constellation Resources Limited (Proposed ASX Code: CR1) has been a mineral explorer and holds the Orpheus Project, having five tenements with 552km² in a prospective portion in the Fraser Range province of Western Australia. It has been earlier highlighted that the project may unveil more to do with discovery for nickel, copper and gold. Particularly, the project includes three granted mineral exploration licences (E63/1281, E63/1282 and E28/2403); and two applications for mineral exploration licences (E63/1695 and E28/2738).

With the initial public offer, the group aimed to raise $7 million through 35,000,000 Shares at an offer price of $0.20 per share. It is expected to start trading on 24 July 2018. The shares were introduced at an issue price of A$0.20 with one free attaching Option for every three Shares issued to raise A$7,000,000 (before costs).
It is key to note that the Company was founded in September 2011 and is currently a wholly-owned subsidiary of Apollo Minerals Limited, which is a diversified mineral exploration company with interests in projects in France, Spain and Australia.

Further, the company is under a Joint Venture Agreement with Enterprise Metals Limited (ENT) and is held responsible for sole funding of all Joint Venture Activities on the Joint Venture Tenements; and aims to have systematic exploration activities on the Orpheus Project to determine the Orpheus Project’s potential. 

While the location and exploration potential of the Orpheus Project look decent, risks on commercialisation and grant of applications in terms of exploration, limited operational history and lack of earnings and production revenues hover around the group. Then risks on joint agreement undertakings and capital requirements are other key things to be looked at. Another aspect revolves around debt forgiveness agreement with Apollo Minerals under which Apollo Minerals will negate all outstanding loans to the Company for exploration activities at the Orpheus Project in consideration for 3,000,000 Options.

As such, it would be prudent to keep a watch on the stock once it is listed on ASX, looking at the risks.

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