Escrow Watch: One of the top IPOs of FY22 is about release a chunk of shares

Copper producer Austral releases 7.5m shares and 10m unlisted options (40c cent exercise price and 3 November 2024 expiry) on 5 August
Biotech Biome Australia drops small avalanche of restricted shares from escrow throughout the month of August

Escrow Watch is Stockhead’s monthly recap of the ASX companies that are releasing shares currently in escrow (also known as restricted securities) over the coming weeks.

ASX shares in escrow are “locked away” and not listed on the bourse so owners can’t sell them – until they’re released.

This is intended to depict to would-be investors when raising capital that the management and previous investors are still backing the venture and aren’t raising capital just so they can “sell out”.

While there’s no guarantee holders of escrowed shares will sell at that point, the mere fact that they will be able to is worth knowing – particularly if shares have substantially moved one way or the other.

Click here for a more detailed description of the ASX rules surrounding escrow arrangements.

Biome Australia (ASX:BIO)

The microbiome health co is releasing a small avalanche of restricted shares from escrow throughout the month of August.

During the past 12 months, biotechnology shares in the US have entered a bear market which has seen the biotech index on the NASDAQ fall by more than 22%.

This negative sentiment has spilled over to the Australian market with heavy selling evident in the sector, particularly across smaller biotechnology stocks.

Canary Capital’s Paul Hart believes that amidst all of the selling lies a great opportunity for astute investors. One of the stocks Canary Capital is currently closely following and has invested into is BIO.

Last week, BIO got a nice share price bump when it announced sales growth had accelerated in Q4 FY22 to $1.39 million, up 50.3%.

Quarterly cash receipts of $1.37 million were up 92%.

The Q4 results represent an annualised sales run rate of $5.56 million, with the sales growth driven by Biome’s Activated Probiotics in both pharmacy and independent practitioner sales channels.

BIO share price chart

Austral Resources (ASX:AR1)

The junior copper producer is releasing 7.5m shares and 10m unlisted options (40c cent exercise price and 3 November 2024 expiry) on 5 August 2022.

The share price is currently 40.5c.

AR1, the newest copper producer on the ASX at its ‘Mt Kelly’ project in northwest Queensland, is up 105% since listing last year.

It timed its run into production to perfection, says stock guru Barry Fitz.

“Assuming the project hits its straps, it has got to be said that 10,000tpa for an initial four years is a lot of copper for a company with a [$70m] market cap,” he says.

“In gross revenue terms, it equates to $530m at the current copper price.

“Compare Austral’s market cap to the $150m-plus market caps of a crop of junior explorers that have recently reported copper exploration success in the same neck of the woods.

“Promising for sure, but they don’t have a proven resource, and they are certainly a long way off from producing, if at all.”

AR1 says 616,000t of ore was mined to end of July containing 5,900t of copper or $55m of recoverable copper inventory.

Of this, 2,320t (worth $25.3m) of recoverable copper is being processed on the heap leach (at spot price 26 July of $10,950/t and 85.2% recovery).

It reported a 9.3% increase in revenue from last Quarter to $5.16m, “with both revenue and production on track for significant increase in the September quarter”.