A 38 per cent drop in initial capital raised on the ASX in 2015-16 has been reflected in several recently cancelled mining floats.

Capital raised from initial public offerings (IPOs) was down 38 per cent in 2016-17 compared to the previous year, according to the ASX monthly activity report for June.

ASX IPOs raised $14.7 billion in 2016-7 compared to $23.6 billion in 2015-16.

In June, low investor interest prompted Macarthur Australia, a subsidiary of TSX-listed Macarthur Minerals, to withdraw its prospectus to raise $5 million.

The company’s IPO was scheduled to close on May 2, with Macarthur Australia to begin trading on the ASX on May 17.

“It is a challenging market for raising capital,” said Macarthur Australia CEO David Taplin. “While the directors are disappointed at this outcome, the board remains confident in the calibre of and potential in Macarthur Australia’s assets.”

“Although the ASX IPO was received with interest, since the Company announced its proposed ASX IPO, the capital raising market for Australia has declined. The value of capital raised in the public markets on the ASX is down sharply so far in 2017,” he added.

Despite pulling the IPO, Macarthur Minerals says it will continue to advance the Macarthur Australia lithium and iron ore projects in Western Australia, as well as its Nevada lithium projects.

NAME COMMODITY LOCATION INTENDED RAISE REASON
Macarthur Australia Lithium Pilbara 5 - 10 million Macarthur Minerals - ‍although ASX IPO was received with interest, since co announced proposed ASX IPO, capital raising market for Australia has declined​
Manuka Resources Silver Cobar Basin, NSW 10 - 13 million Obtained funding from the debt market and has entered into a binding term sheet for the provision of debt finance
Traprock Mining Copper and Gold SE and central QLD 6.5 million n/a
Wilgena Resources Gold Central Gawler Craton Gold Province SA 7.5 million n/a

Source: Bloomberg

Another IPO hopeful Manuka Resources pulled a prospectus lodged March 23 to raise a minimum $10 million. Manuka was instead seeking funds via debt finance.

The company said it “has entered into a binding Term Sheet for the provision of debt finance, which is non-dilutive and cost effective”.

The company is seeking to restart production at its flagship Manuka silver project in central NSW with a production decision anticipated in the second half of 2017.

Gold-focused explorer Taprock Resources, which owns projects in southeast and central Queensland, pulled out of its slated IPO to raise $6.5 million at 20c per share. The offer was expected to close on December 7 2016 but the application was withdrawn.

“Traprock has now decided to withdraw its ASX listing, and move straight to mining,” the company advised.

“Mine leases over the Mt Chalmers mine site have been applied for, and Traprock is looking to fast forward this project. Work is beginning on the Waroo Mine lease Application.”

Adelaide’s Wilgena Resources also abandoned an ASX listing this year.

The company, which is undertaking mineral exploration in the Central Gawler Craton Gold Province in South Australia, had sought $7.5 million for exploration including tenements acquired from Doray Minerals.

 

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