More than 200 junior mining and exploration companies would fail to meet new listing requirements the Australian Securities Exchange plans to introduce later this year, a study has found.
While the ASX’s proposed changes are focused on initial public offerings and backdoor listings, about 212 ASX-listed junior miners would currently fail the assets test criteria, S&P’s Global Market Intelligence report found.
ASX’s listing changes include an increase in minimum financial thresholds, requiring audited financial reports for the past three years, having a larger free float, and a revised shareholder spread.
“Based on the most recently reported net tangible assets and a market capitalisation as of June 3, there are 212 ASX-listed companies that would not meet either of the newly proposed thresholds,” the report said.
“Precious metals-focused juniors are the largest group to fail the proposed higher thresholds, accounting for over 39 per cent of the potentially affected companies.
“Base metals companies make up another 26 per cent, while bulk and specialty commodity-focused juniors make up the remaining 35 per cent.”
The report said the changes would likely further complicate junior miners’ ability to attract funding from companies interested in backdoor listings via a listed junior.
“Many of the acquiring companies will now have to pass the new financial thresholds, while another proposed change will force the targeted juniors to be suspended from trading at the time of announcement, preventing both the junior and the acquirer from gauging the market’s perception of the backdoor listing’s business model.”
The ASX’s new rules are expected to come into effect in September.
