Azure Minerals has been one the ASX’s great success stories in the past 12 months. But the Azure story is one of passion, patience and a sprinkling of good luck. In late 2003, a little company called Nickel Australia listed on the ASX following a A$15 million initial public offering.
Geologist Tony Rovira, who had won the prestigious AMEC Prospector of the Year Award in 2000 for the discovery of the Cosmos nickel deposit, had recently left Jubilee Mines and officially joined Nickel Australia as managing director on the day of listing.
Nickel Australia’s main assets were the nickel rights on some tenements owned by Croesus Mining.
“We spent two or three years exploring for nickel on the ground and didn’t have much success,” Rovira recalls.
By early 2006, Nickel Australia was looking for other opportunities but due to high commodity prices at the time, assets in Australia were expensive.
Rovira said the project hunt extended to Asia, Africa, Europe and South America, but the company settled on Mexico after visiting the country and liking the prospectivity.
Nickel Australia changed its name to Azure Minerals to reflect the change and enjoyed some exploration success.
“There were a couple of copper deposits, a gold deposit, a silver deposit and also a massive lead-zinc-silver deposit,” Rovira said.
“A couple of them were grassroots discoveries – never been tested before – so it was good exploration work by the team over there and we were making good discoveries, but they were never quite big enough or never quite good enough to get over the hump.”
Azure’s success at the Promontorio copper project even attracted Rio Tinto in 2014 to a staged joint venture agreement worth as much as US$95 million.
However, Rio walked away in 2017 after spending around US$4 million on exploration and Azure retained 100% of the project.
Still, the agreement had come at a fortuitous time for Azure, when equity markets had essentially abandoned explorers.
“We were able to ride out that downturn by having someone else spend money on the project while keeping the news flow happening,” Rovira said.
While Azure was struggling to hold market interest, Mexico was also becoming a more difficult place to operate.
“Mexico is amazing. There’s some incredible mines and lots of opportunities to make new discoveries,” Rovira said.
“And at that time in the mid-2000s, governance-wise, Mexico was a really good place to operate.
“Here we are 20 years later and you can’t say the same thing. Unfortunately, Mexico has gone backwards a long way in terms of its potential for exploration mining companies to operate there properly.”
Pandemic hits
The increased difficulties of working in Mexico, as well as the onset of the COVID-19 pandemic in March 2023, prompted are think by Azure.
“Mexico was hit pretty hard with COVID, so there was at least two years over there when absolutely nothing was being done on the ground by anyone, so coming back here was opportunistic, and we grabbed it.
“We put everything and care on care and maintenance in about March of 2020 and I then said to the board, we need to find a project in Australia, preferably in Western Australia, because those internal borders were starting to come up.”
Fortunately, Rovira knew legendary WA prospector Mark Creasy quite well and thought he may have some gold or base metals projects in WA he’d be keen to sell or joint venture.
“And he said, ‘well, I’ve got a couple of pieces of moose pasture, which may well have a bit of gold potential on them, but really, the best project I’ve got Tony is called the Andover nickel project and considering your background in nickel with Jubilee, I think this would be the ideal one,” Rovira said. Several months later, in July 2020, the deal was announced with Azure acquiring 60% of the Andover project, just outside Karratha, with Creasy retaining a free-carry 40% through to a decision to mine.
Azure got access to the project the same month and started drilling in October, confirming the project’s excellent nickel potential.
Azure’s early mover status at the start of the pandemic meant it was about six months ahead of the start of the severe skills shortage in WA. The company managed to secure Graham Leaver as exploration manager.
The company hit nickel sulphide mineralisation on the very first hole at Andover, which returned 3.9m at 2.85% nickel and 0.47% copper from
94.5m within a broader intercept of 22.4m at 1.02% nickel and 0.55% copper from 81.6m.
Azure was able toraise A$37 million tocontinue exploration after its share price rose to as high as A$1 off the back of the discovery.
In March 2022, Azure reported an initial indicated and inferred resource of 4.6 million tonnes at 1.1% nickel, 0.47% copper and 0.05% cobalt, or 1.41% nickel equivalent, for 51,700t of contained nickel, 21,700t of copper and 2290t of cobalt.
Lithium pivot
In the meantime, the lithium price had started to take off in 2021.
“We didn’t even consider looking for lithium, but at the start of 2022, I asked the exploration team if there was any potential for pegmatites and lithium on the property, but outside of the area we were exploring for nickel,” Rovira said.
The team confirmed the presence of outcropping pegmatites, but due to a hefty backlog of assay results in WA, the results of initial sampling took months to return.
“We started getting our first assays in July or August 2022 – we got a few sniffs and we waited to get another batch,” Rovira said.
“I didn’t want to go out there and broadcast to the world that we were exploring for lithium because everyone was doing that.”
The first announcement reported the results of about 60 rock chip samples, but it was after the release of the second batch that Rovira got a call from SQM’s business development manager Luis Bravo.
“I said to Louis, ‘why are you calling me when there’s dozens of companies that are putting out similar sorts of results?’ He said, ‘yes, that’s true. Dozens of companies are, but we evaluate all of those and we only want to talk to the ones that look serious and the information you’re putting out in those two press releases indicated to us that you were doing good quality work and that there could be something of substance there’,” Rovira said.
Azure and SQM kept talking and the Chilean company asked if they could visit Andover, which led to an offer to buy into the project.
Given it was already a joint venture, Azure said no, but SQM offered to invest directly into the company via a A$20 million placement to take 20% of Azure, a premium to the company’s market capitalisation at the time.
The capital injection allowed Azure to get some drill rigs on site in early 2023.
“By July, we had eight drill rigs going and still to this day, we’ve got eight drill rigs going,” Rovira said.
The hits kept on coming, including a stunning 209m at 1.4% lithium oxide.
At Diggers & Dealers 2023, Azure announced a lithium exploration target of 100-240Mt at 1-1.5% lithium oxide, which, if realised, would make Andover a top five global lithium deposit.
“Diggers was fantastic, and it was an eye-opener for people that were there going ‘oh, this looks really big and really good’,” Rovira said.
Feeding frenzy
A week after Diggers 2023, Azure confirmed it had received takeover interest from SQM a month early at a price of A$2.31, a price substantially below the share price at the time.
Azure embarked on a A$130 million capital raising at A$2.40 per share, an offer backed by SQM and Creasy.
In October 2023, Azure agreed to a A$1.63 billion, or A$3.52 per share, takeover offer from SQM.
But in early November, the deal was complicated by the arrival of Gina Rinehart’s Hancock Prospecting which bought approximately 18.3% of Azure’s shares on-market in one day.
Mineral Resources also became a major shareholder, spending nearly A$80 million buying shares on-market in Azure to amass a 12.3% stake.
“I know a number of other lithium players also bought in and that was a feeding frenzy, which was quite remarkable to see and it sent the share price rocketing upwards,” Rovira said.
“Back in July, we were 60c, something like that, and then all of a sudden, we’re three and a half dollars.”
Just before Christmas, Azure called a trading halt and announced a new joint bid between SQM and Hancock, valuing the company at A$1.7 billion.
Eventually, MinRes retreated and sold its Azure stake in February 2024, allowing the SQM-Hancock deal to be completed in early May.
“It’s quite remarkable, that the transaction was A$1.7 billion value, when the company only owns 60% of an asset, and we don’t even have a mineral resource yet,” Rovira said.
The final chapter
Rovira said SQM and Hancock had been wonderful to deal with throughout the transaction period.
“They both bring different strengths to the party: SQM, with the processing and marketing side of things, and Hancock, with their operational experience as well and project development experience in Australia,” he said.
Rovira said the whole thing was a lesson in the importance of timing.
“Timing in terms of your discovery, of the price cycle of the metal that you’re dealing with, of the enthusiasm that’s in the market, and for us, everything aligned for the takeover to happen at the right time for all concerned,” he said.
“And it’s probably the best possible deal that the shareholders could get, and I think the timing was absolutely critical for Hancock and SQM because if they left it too much longer, a mineral resource might have made it much more attractive to someone else, perhaps.”
Azure took out the Dealer Award at Diggers & Dealers last month, shortly before Rovira finished up with the company he had led for 20 years.
Reflecting on the journey, Rovira said it was important to have belief and stay the course.
“But also, when something tells you that’s the wrong course, you’ve got to have the nous to know to change course,” he said.
“And I think, over the 20 years at Azure, we didn’t make too many wrong decisions.”