01/10/2008 - 22:00

Credit crunch puts squeeze on locals

01/10/2008 - 22:00

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IT has been a tough past few months for companies looking for extra cash, with the surge in market volatility causing investors to further tighten the purse strings.

IT has been a tough past few months for companies looking for extra cash, with the surge in market volatility causing investors to further tighten the purse strings.

Perhaps two of the bigger Western Australian victims of the market turmoil, in terms of dollar figures, are copper miner Anvil Mining Ltd and explorer Strike Resources Ltd.

In July, Anvil announced that Catala Global Ltd, linked to Israeli mining investor Dan Gertler, would subscribe to shares worth $C297 million with funds raised to complete expansion works at its copper project in the Democratic Republic of Congo.

As market conditions deteriorated that figure was downgraded to $C237 million a month later.

In mid-September, Anvil said it would look at other funding options as Catala called off the placement.

It was a similar scenario for Strike, although the company managed to raise $49.7 million out of a total $103 million from a private placement to Gallagher Holdings, controlled by Russian billionaire Alisher Usmanov.

The remaining $53 million, as part of the second tranche, fell through last week as market upheaval took its toll on due diligence investigations.

Mum and dad investors also fell in line with jittery investment companies, as Beadell Resources Ltd's hopes of becoming an instant gold producer were dashed by market instability.

The West Perth-based company had planned a capital raising as part of a $300 million equity and debt package to fund its acquisition of the Cracow gold mine.

But turbulent market conditions put Beadell's goal of stepping into the producer's ring on hold, as shareholders shied away from the capital raising.

Beadell's news, announced in July, set the tone for a string of exploration companies eager for shareholder support by way of cash.

Balkans Gold Ltd, Azure Minerals Ltd, TNG Ltd and Zambezi Resources Ltd all suffered short falls in their capital raisings plans, with stakeholders subscribing to up to half of shares on offer.

Azure had better luck with institutional investors, with the company managing to get closer to its $3 million target following a share placement.

Market volatility has also derailed restructuring plans for agricultural investment manager Great Southern Ltd.

Under the plan, Great Southern was to have offered shares priced at $1.10 each in exchange for investors' stake in eight of the group's managed investment schemes.

However, its share price slumped from 73 cents when the restructure plan was unveiled to 42.5 cents when the review was announced.

Another big loser was Moly Mines, which failed to secure finance for its $1.1 billion Spinifex project in the Pilbara.

But it was not all bad news during the quarter, with gold stocks managing to raise cash to fund projects. Apex Minerals NL recently raised $60 million from an agreement with Goldman Sachs JBWere Pty Ltd, while Allied Gold Ltd pocketed $11 million from a share placement

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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