IPO Watch: Iron ore newbie Equinox rose 35% on debut as major iron ore stocks faltered
Link copied to
It takes some steel to launch an iron ore explorer at a time when predictions of the commodity’s imminent demise are gathering pace.
But we’ve now seen two IPOs in recent weeks float onto the boards of the ASX, with Equinox Resources (ASX:EQN) joining Pearl Gull Iron (ASX:PLG) as an iron ore newbie.
Equinox fared much better than Pearl Gull did on its opening day (which coincided with the iron ore price’s brief dive below US$100/t last month), with its shares rising 35% to 27c, well above the 20c issue price for its $9 million IPO.
Despite recently hitting iron ore grading almost 70% at its Cockatoo Island project, Pearl Gull remains below its recent 20c issue price, following the rest of the market down 6.5% today as iron ore prices fell from US$135 to US$129/t.
But regardless of price projections, neither of the recent entrants seem to be listing just to find a quick path to production.
Equinox’s sole asset is the Hamersley Iron Ore Project in the Pilbara.
That may sound familiar to longtime investors in the market.
Not only is that name synonymous with iron ore in WA’s North West as the firm that became Rio Tinto’s world-beating iron ore division, but the project itself has long sat in the hands of ASX-listed juniors Cazaly Resources (ASX:CAZ) and Pathfinder Resources (ASX:PF1).
Both (Pathfinder 36.65%, Cazaly 15%) are major shareholders in Equinox, having vended the Hamersley project into the float.
Compared to the small scale iron ore mines which a number of juniors brought into production this year as prices rose to record highs (some of which were placed in mothballs in recent weeks as prices fell faster than anticipated) the project is substantial in size.
It contains a JORC 2012 indicated and inferred mineral resource of 343.2Mt at 54.4% iron content.
Equinox, led by experienced iron ore executive Daniel Taylor, plans to explore and develop the deposit which sits in the heartland of the world’s greatest iron ore domain.
Located around 50km north of Tom Price, the project is bounded by some of Australia’s biggest iron ore deposits, including Fortescue Metals Group’s (ASX:FMG) Solomon hub.
Equinox’s successful debut came as most iron ore producers slipped, with a 5% loss making FMG the worst hit among the majors.