Investor jitters sink explorer floats

Things looked good for resources floats earlier in the year, but some companies which planned July/August floats have faced sinking prospects in recent weeks.

Led by a renewed interest in gold, the resource market warmed during the first half of the calendar year.

This was the catalyst needed for many companies sitting on projects awaiting development, or wanting to spin off certain commodities.

But large corporate losses and scandals have gutted investors over consecutive months.

Corrs Chambers Westgarth partner Tim Wong said capital raisings had been drying up at the speculative end of the mining market.

Anecdotal evidence out of London, the world’s largest market, was of floats being pulled in the past few weeks and of brokers becoming less prepared to underwrite projects that would have been no problem a few months earlier.

Locally, Olympia Resources withdrew its ASX listing application and prospectus two weeks back.

The company has heavy mineral sands and garnet prospects it was expecting could be developed to production within 12 months, but nonetheless only attracted a little more than half the number of shareholders it needed after twice extending the offer.

"The difficulty was not the money so much," Olympia managing director Alan Lockett said. "We needed more shareholders."

Mr Lockett said the Olympia was not without options and was likely to make a decision within two months on one or more of these.

With both its garnet project in the Northern Territory and its mineral sands holdings, Olympia had been approached by large organisations keen to form joint ventures and others with healthy cash reserves and looking for projects offering back-door listings.

In recent weeks, other proposed listings by WA explorers, including Universal Resources, Vulcan Resources, Blina Diamonds and Metals Quest Australia Limited, have extended their offers, while Central Queensland Resources decided to put up another IPO prospectus under a new company name.

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