Resources IPO Watch: who’s about to sink or swim?
It was a common theme in the latter part of 2018.
November and December are traditionally strong months for listings, according to the ASX, but instead we saw a swath of companies delay or pull out entirely.
They usually blamed it on market conditions.
And the four mining stocks which managed to raise the cash and list in the last few months are all currently in the red.
Thatprobably says more about the wider market than the quality of their projects.
EY’s fourth quarter Global IPO Trends report concludes that this was a global phenomenon.
It blamed geopolitical tensions, trade issues between the US, China and the EU, and the looming exit of the UK from the EU.
But here’s the good news.
“Looking ahead to 2019, we expect a cautious start, followed by rays of hope that should brighten IPO activity in the second half of the year,” EY IPO leader Dr Martin Steinbach says.
“In the meantime, it is more important than ever for IPO candidates to remain flexible and be well-prepared to move when the fog begins to lift.”
In Australia, EY predicts that investors will continue to be selective about what larger IPOs (by deal size) they support, “restricting IPO volumes at the top end of the market in 2019”.
IPO activity instead will focus on smaller cap mining and metals and technology companies, EY says.
Recent resources floats and their performance>>>
Who’s due to (finally) light up the boards?
The fact everyone has been so tightfisted means most mining stocks due to list in the next month have been been forced to extend their offer periods.
CANTERBURY RESOURCES (ASX:CBY)
Copper and gold explorer Canterbury Resources (ASX:CBY) looks like it will be one of the first resources players to make its ASX debut in 2019.
The company closed its reduced $6m IPO on December 28 and expects it will light up the boards in the “latter part of January”, director Grant Craighead told Stockhead.
Canterbury, which has exploration projects in Papua New Guinea and Queensland, was originally hoping to be listed by the end of October.
But the “headwinds of volatile markets” and “Donald Trump’s tweeting” made it a little challenging, Mr Craighead said.
Gold explorer Expose Resources was originally looking to list on November 29 after launching a $4.5m IPO.
A representative told Stockhead the company was about to launch a supplementary prospectus, extending the IPO offer through to the end of February.
The company was offering up to 22.5 million shares priced at 20c each to raise the cash.
If Expose raises the full $4.5m, it will have about 44.1m shares on issue — and a market cap of about $8.8m. Some 11 million shares will be held by the directors.
Copper focused XS Resources was also aiming to light up the boards on November 29 after it completed its offer of 22.5 million shares at 20c to $4.5 million.
But this hasn’t happened, so the offer has been extended until February 11.
On listing, the junior explorer will have a market cap of just under $7 million and cash in the bank amounting to $4.9 million.
Freshly-minted gold explorer PVW Resources launched an IPO in November to raise up to $7 million.
The IPO was originally set to open on November 8 and close on November 30, with listing pencilled in for December 12.
The company now is aiming to close its IPO January 18.
If it raises the cash, the company will have a market capitalisation of up to $21.8m and up to $8.4 million in the bank.
Heavy mineral sands (HMS) focussed Relentless Resources was forced to extended its IPO until January 31 after it also failed raise the required cash.
The advanced explorer is now aiming for a listing in February.
The company wants to raise at least $8m by issuing 16 million shares at 50c each.
Tolga Kumova is well known for his successful small cap resources picks, and now he is behind a new Africa-focused gold company that wants to list on the ASX.
African Gold has launched an IPO to raise $4.5m by issuing shares at 20c apiece.
The company is exploring for gold in Cote d’Ivoire at a project called “Agboville”.
African Gold is aiming for a mid-February debut under the ticker A1G.