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Australian Mines' trading activity raises ASX eyebrows

Published: 09:46 18 Oct 2017 AEDT

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Sconi is located in northern Queensland

Australian Mines Ltd (ASX:AUZ) has been one of the most actively traded stocks on the ASX in recent weeks, and the company has now responded to a price and volume speeding ticket from the exchange.

The company said it was not aware of information not disclosed that could explain the recent trading activity, but did note back to the exchange:

"Australian Mines notes that Macquarie Research, part of Macquarie Bank Limited, recently announced a 12-month price target of $2.10 for Clean TeQ Holding Ltd (ASX:CLQ), which would value their sole mining asset (being the Syerston Project) at $1.2 billion.

"As the company has reported to the market, including most recently on 6 September 2017, Australian Mines’ Sconi Project is similar to Clean TeQ Holding’s Syerston Project including in terms of their resource tonnage, expected cobalt-nickel-scandium feed grade, geology, metallurgy and expected metal recoveries.

"Despite Australian Mines’ Sconi Project and Clean TeQ’s Syerston project being very similar, Australian Mines’ market capitalisation is currently about 10% of Clean TeQ Holdings.

"The significant disparity between Australian Mines and Clean TeQ’s market capitalisation appears to have created an arbitrage situation whereby investors can gain exposure to the cobalt-nickel market via Australian Mines at a material discount to its peers."

Sconi is an advanced cobalt development play in Australia, with all mining approvals in place and a mine life in excess of 20 years.

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