Two Western Australian companies have cited investment market volatility as a key issue for the failure of their fund raising plans, the first notable setbacks after a period of unprecedented corporate activity.
Herdsman-based diversified explorer Northern Mining Ltd and Perth-headquartered technology player pSivida Ltd both blamed the markets for setbacks in previously announced fund raising moves.
Their news comes during a month when the Australian market witnessed two of the biggest one-day declines in the sharemarket since September 11, 2001.
Last week Northern Mining withdrew its prospectus, dated June 6, citing the current volatility in the share market as the major reason.
The company was offering 18.75 million shares at 20 cents to raise $3.75 million.
Northern Mining said in a statement that the decision was made following advice from lead manager, CK Locke and Partners, and supporting brokers that a successful capital raising in the current financial environment was unlikely.
Of the capital to have been raised, $1.7 million would have been used to fund exploration costs for its prospective nickel and gold targets east of Kalgoorlie and prospective base metal and uranium targets in the Northern Territory over a two-year period.
Meanwhile, pSivida said the current poor US market conditions were a key reason for its decision not to seek to make a placement to cover a shortfall in subscriptions for an issue of non-renounceable rights.
Last month the company announced it was conducting a one-for-eight rights issue at 60 cents per share to raise up to $29 million through the issue of up to approximately 48.3 million new ordinary shares at 60 cents each.
However, only $6.3 million before costs was raised with the issue of approximately 10.5 million shares, representing a subscription of 22 per cent of the total shares available under the rights issue.
The company noted that US shareholders who were ineligible to participate in the rights issue own 45 per cent of the shares on issue.
Investment adviser Janney Montgomery Scott LLC had previously been appointed to place the shortfall in the US.
The company said the proceeds were to be used to fund clinical trials of its Medidur product for treating certain eye diseases and its lead BioSilicon product BrachySil, which was being developed for use in the treatment of pancreatic cancer.
pSivida’s share price has dipped since opening on June 14 at 59 cents, dropping this week to 53 cents.
