ASX Capital Raise Roundup: Did somebody say ‘buyer’s market’?

ASX Capital Raise Roundup is a fortnightly look at ASX capital raisings.

We are at the point in the capital raising cycle where pricing power has come back to investors.

Companies are lowering their pricing expectations to the bottom of technical trading ranges, as exemplified by this week’s Los Cerros Limited (ASX:LCL) ~$20mn Placement, or offering new shares at a discounted price to the last trade as per the Sayona Mining Limited (ASX: SYA) and Aeon Metals (Limited ASX:AML) capital raise transactions.

In the case of this week’s Liontown Resources Limited (ASX:LTR) deal, the company was able to complete a well-received $52 million Placement with the use of funds geared towards further works at their red hot Kathleen Valley Lithium-Tantalum Project.

A likely continuing data point of this capital raising cycle is the initial weakness followed with a period of price stabilisation for recent IPOs. Many new listings are trading immediately at a discount to their issuance price.

This phenomenon likely is due to initial shareholders who were hoping for an immediate share price re-rate, yet disappointed with the price action.

In some cases, though, these companies such as Tamboran Resources Limited (ASX:TBN), with a world-class natural gas field backed by a highly pedigreed management team and strong initial shareholder base, could be excellent investment opportunities.

On a constructive note, this week’s IPO of Industrial Minerals Ltd (ASX:IND) is currently trading ~$0.35, up from its initial listing price of $0.20.  The silica sand company has a number of highly prospective projects with the underlying commodity in short supply.

In summation, we are in a time period to be selective with investments and understand that macro market conditions are the big driving market force.

Placements this week

Los Cerros Limited (ASX:LCL) has completed a $20m placement at 16c per share managed by Euroz Hartleys. In what was an extremely popular raise at 180 Markets, we can see that investors are getting excited by promising gold companies again.

The company is now fully funded with the placement funds being used to increase its diamond rigs at its Quinchia Project in Columbia. A maiden resource for its Tesorito South prospect will also be released shortly.

Shaun Factor, co-founder of 180 Markets said: “Los Cerros has been releasing some fantastic results recently, however its share price has been unable to move given the perception that the company was not fully funded. It will be interesting to see if this capital raise can help change this perception.”

180 Markets again participated in a raise with NewPeak Metals Limited (ASX:NPM). Together with MMG Capital, a well-known European broker, we helped raise $1.6m for the company. The placement was done at 0.15c per share with one attaching option for every two shares subscribed for.

NewPeak Metals managing director David Mason said: “We’ve been impressed by the response we’ve received for this capital raise from the new European and Australian investors, and we welcome them to NewPeak. We are now in the strong position to be able to implement our Finland Gold and Sweden Strategic Metal exploration and resource definition plans, where we have targeted to define JORC Resources during 2021 and early 2022, as well as progress our portfolio pf projects in Argentina and New Zealand. NewPeak is on track to drive its aggressive plans to increase market value.”

This is the third time 180 Markets has worked in collaboration with NewPeak Metals, and we are hoping for a good result.

Liontown Resources Limited (ASX:LTR) raised $52m in an extremely oversubscribed placement at 76c per share. The funds will be used to accelerate development of the company’s world-class Kathleen Valley Lithium-Tantalum project in Western Australia. Participants in the placement will also receive an entitlement to the proposed demerger of Liontown’s Moora and Koojan JV assets in Western Australia. The raise was successfully managed by Bell Potter Securities.

180 Markets was delighted to assist Inventis Limited (ASX:IVT) place $1.75m as part of the shortfall from its entitlement offer. The shares were placed at 0.9c per share and the placement received strong interest from investors.

On Monday, Inventis announced an increase in sales of 16% to $16.8m for the last financial year. The company said that this was a good result given the impact of ongoing Covid-19 lockdowns, particularly in New South Wales and Victoria and there are a lot of opportunities moving forward into FY22. The technology divisions saw an increase in sales of 56% to the last year.

Digital Wine Ventures Limited (ASX:DW8) remains in a trading halt for an acquisition and a $7.5m capital raise at 6.5c per share. The capital raise price represented a 28% discount to the previous close of 9.1c per share. Blue Ocean Equities was lead manager for the offer. DW8 has entered into a binding term sheet to acquire the Parton Wine Group, a 3PL wine logistics business with over 23,000 SQM of warehousing capability in Sydney, Melbourne and Perth. In its 14 years of operation, Parton has amassed 290 accounts nationally representing 150 unique active customers. There is significant scope to improve the profitability of Parton via synergies with DW8.

Caspin Resources Limited (ASX:CPN) has raised $9.75m through a capital raise at $1.00 per share. The raise was cornerstoned by its major shareholders, Chalice Mining and Tinci Materials. Chalice will now hold 9.2% of Caspin post-placement. The funds from the raise will be used on exploration at the highly prospective Yarawindah Brook PGE-NI-CU project and to advance the 100% owned Mount Squires Project.

Caspin CEO, Greg Miles, commented: “We are very pleased with what has been a highly successful capital raising for the Company. The continued support from Chalice and increasing position of Tinci, along with strong support from existing, long-term and new investors reflects the exciting potential of the Company’s projects.”

Thinking about taking the IPO leap?

It was pleasing to see a very strong week of IPO listings this week. Another six companies hit the bourse this week.

The most impressive listing for the week was Balkan Mining and Minerals Limited (ASX:BMM) which is currently trading at almost double the 20c IPO price. Investors were obviously keen to put their money alongside Sandfire Resources who owns 22% of the company.

Another company with an impressive register is the aforementioned Industrial Minerals Ltd (ASX:IND) which has a heavy focus on mineral sands. Well known investors such as Tolga Kumova and Robert Jewson, as well as other bid names were seen on the register. On the first day of trading, the share price closed at 35c per share which represented a 75% increase to the 20c listing price.

Aerison Group Ltd (ASX:AE1) was another notable listing, currently trading at 35% higher than its 20c issue price.

180 Markets Analyst, Ariella Grunfeld said: “It is great to see the aftermarket support return to IPOs this week. Investors are clearly looking at company registries and are excited by the new companies that are listing. Next week, it is expected that another 8-10 companies will hit the bourse. We have hopes that it will be another positive week for IPOs.”

180 Markets’ recent performers

180 Markets was established by investors for investors, and has become Australia’s leading deal sharing platform, with a difference. In just 12 months, 180 Markets has established a 1800+ strong investor base that has enjoyed access over 650 placements on the ASX, including more than 30 placements where 180 Markets has been lead manager.

If you are interested in Placements, IPOs and RTOs sign up at www.180markets.com.au.

This article was developed by 180 Markets, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.