Gold raisings weigh on investors

An investment in each of the 10 largest capital raisings by companies in Western Australia during 2013 would be 14 per cent underwater at current prices, according to research conducted by Business News.

The research revealed that six of the top 10 raisings for the 2013 calendar year, which ranged from $56 million to $200 million, were trading below their issue price.

Gold producers in particular dragged the pack down, as investors shied away from those companies exposed to the precious metal following a slump in its price.

The worst performer of the 10 transactions was gold producer Noble Mineral Resources, which raised $85 million but entered administration just six months later when it failed to pay debts to investment group Rothschild Australia.

The next poorest performer was Tanami Gold, which raised $65.3 million by issuing stock at 20 cents each – a 65 per cent discount to the market price at the time.

Tanami’s share price has since slumped to just 1.6 cents after the company put its only producing asset, the Coyote gold mine in WA, on care and maintenance about a month after completing the raising.

Another gold producer, Silver Lake Resources, mining services firm MACA, uranium producer Paladin Energy, and Karoon Gas Australia were also trading significantly below their capital raising issue price.

Sundance Energy, which is drilling for oil and gas in the highly prospective Eagle Ford shale formation in Texas, and Sirius Resources, which continues to develop its highly rated Nova-Bollinger nickel discovery in WA, were the best performers among the top 10 capital raisings.

Sundance stock is trading 26 per cent above the issue price of its $63.1 million raising, while Sirius stock is 25 per cent higher than the issue price of its $83.5 million raising.

Investors in property developer Peet’s $132 million raising are also 15 per cent better off. However the capital raising came at the expense of the company’s existing shareholder base as the transaction was issued at an 18 per cent discount.

Property investor BWP Trust, which completed the largest raising in 2013 with a $200 million transaction, was also in the black with its share price trading up 8 per cent from the issue price.