IPO Watch: Potash explorer Trigg Mining goes in for round 2 with IPO relaunch
Potash hopeful Trigg Mining is again trying its luck at becoming an ASX-listed company with the launch of a fresh IPO.
“Last year we hit the market at a pretty tough time — everything started heading south just as we arrived,” managing director Keren Paterson told Stockhead on Monday.
“It was market dynamics predominantly that caused us to withdraw it and wait for a better climate.”
And now seems to be that time, but with some slight changes.
“We have reorganised the capital structure,” Paterson said.
“So, the enterprise value has come down from $13m to $7m, giving more uplift for IPO investors.”
Trigg is aiming to raise $4.5m via the issue of shares at 20c each to pave the way for a June 28 debut.
The Perth-based company has 2640 sq km of sulphate of potash-prospective land near Laverton, Western Australia.
Trigg is named after Henry Trigg, a founder of Western Australia and an ancestor of Paterson.
Potash comes from salts that contain potassium in water soluble form. It is used as a fertiliser.
There are two commonly used fertilisers – muriate of potash (MOP) and sulphate of potash (SOP).
MOP is the most common (around 90 per cent of the world’s potash) and is used on a variety of crops. However, the more chloride-sensitive crops like avocados, coffee beans and cocoa require SOP – which fetches a premium over MOP.
The global potash market is estimated to be around 75 million tonnes.
About 60 million tonnes of that is MOP and roughly 7 million tonnes is SOP.
Demand is set to increase as the global population grows to around 8 billion by 2023.
Right now Australia imports all its potash from Canada, the Middle East and Europe. Australia’s MOP and SOP consumption is around 250,000 tonnes each year.
China and big plantation-focused countries in southeast Asia – like Malaysia and Indonesia – are expected to be the key contributors to demand growth.
This rising demand has prompted an increase in investor interest in Australian potash players.
Trigg raised $400,000 in seed capital in November last year and that raising saw the company attract its first institutional investor – Regal Funds Management.
In 2016, the Sydney-based hedge fund launched its “emerging companies strategy”, which focuses on investments in the pre-IPO, unlisted expansion capital and the listed microcap space.
The first fund was launched in late 2016 and the second fund launched in April last year.
Meanwhile, Kalium Lakes (ASX:KLL) wooed private equity player Greenstone Resources, which agreed in April to stump up $20.8m to take a 19.99 per cent stake in the junior potash explorer.
Kalium is advancing its Beyondie project in Western Australia’s East Pilbara region towards production.
In January, Australian Potash (ASX:APC) produced the country’s first ever potash at its processing plant in Canning Vale, south of Perth.
Managing director Matt Shackleton told Stockhead at the time some of the initial 250kg produced in the first production run would be destined for a research program at UWA and some would be sent to China for testing by potential customers.
At full production, Australian Potash’s Lake Wells operation will produce about 150,000 tonnes per annum.
Australian Potash does have ambitions to eventually supply into the Australian market, but its initial target is China.
Other ASX-listed potash players are also looking to sell their product overseas.
Kalium’s potash is locked up in a deal with German chemical giant K+S, while Salt Lake Potash (ASX:SO4) has shaken hands with a Chinese fertiliser distributor and Japanese heavyweight Mitsubishi Corporation.
Salt Lake started construction in March on Australia’s first commercial scale on-lake evaporation pond system at its Lake Way project, one of 11 lakes that makes up the Goldfields Salt Lakes project.
But Trigg’s plan is to start selling domestically from the outset.
“I’ve been out talking directly with farmers across the West Australian agricultural sector and they’re all really interested,” Paterson explained.
“We presented at the WAFarmers Annual Conference earlier in March and just from that point on it’s almost like: ‘When are you coming and how can we help?’”
Trigg has so far identified mineralisation on just 15 per cent of its Laverton Links and Lake Throssell projects and has defined an exploration target of 2.5 million to 9 million tonnes for the Lake Rason prospect.