27/11/2012 - 13:02

Explorers brave harsh conditions to complete IPOs

27/11/2012 - 13:02

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Explorers brave harsh conditions to complete IPOs

Perth-based explorers Windward Resources and Auroch Resources have dipped their toes into a tough IPO market, raising a combined $5 million through initial public offerings that closed today.

Gold, base metals and mineral sands explorer Windward raised $2 million through its initial public offering, which closed early and oversubscribed.

The Perth-based junior expects to list on the Australian Securities Exchange by November 28.

The IPO was priced at 20 cents per share.

“We are thrilled by the response from investors to the IPO,” chairman Steve Lowe said.

“The early closure of the IPO provides the company with an opportunity to progress our projects earlier than anticipated.

“While the primary focus will be on the Fraser Range South project, the company is also seeking to make future acquisitions to grow the company's portfolio of projects.

The Fraser Range South project is considered to be highly prospective and is located in close proximity to Sirius Resources' Nova discovery, which has made Sirius one of the ASX's market darlings over recent months.

Windward announced prior to the IPO that it had entered a farm-in and joint venture agreement with a private entity controlled by Sirius Resources major shareholder Mark Creasy, which owns the tenements.

Mr Creasy also holds a 50.19 per cent stake in Windward, through his Yandal Investments vehicle.

Meanwhile, Auroch Resources, which was formerly known as Terranova Minerals, today closed a $3 million IPO ahead of its planned re-listing on the ASX.

The company is in the process of acquiring the Manaca Gold project in Mozambique from Pan African Resources, which will become its cornerstone investor.

The 3 million ounce project is located in central Mozambique, 270 kilometres from the city of Beira.

Auroch expects to re-list on the ASX by December 10.

The floats come at a tough time in the IPO market, with the S&P/ASX Small Resources index's performance reflective of the challenges facing junior explorers.

The index has fallen from 5,279 points on October 31 2011 to 4,074 at the same time this year.

Sydney-based investment advisor and former fund manager Andrew Brown said the index had been hit by risk aversion, particularly in the smaller resources area.

“In the first 11 months of 2012, only 22 new resources floats on the ASX focused on minerals and raised a total of just $96.5 million,” Mr Brown, who is also chairman of mining junior Adelaide Resources, said.

“The average offering size was $4.4 million, and nine of the 22 companies raised $3 million or less.

“To compound the misery, half of the 22 securities now trade below their offer price.”

Recent WA floats have provided a glimmer of hope for the sector, however, with Metals of Africa (up 3c), Dacian Gold (up 20c) and Boadicea Resources (up 7c), which all listed in October, all trading above their offer prices.

But fellow October ASX entrant Victory Mines has not fared so well, with its shares trading at 14 cents today, down from its offer price of 20 cents.

 

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