Juniors in strong capital markets

Capital markets have supported resources juniors through COVID-19 much more strongly than anticipated, industry watchers have said.

Deal activity had continued despite the pandemic, Gilbert + Tobin partner Sarah Turner told the RIU Resurgence conference this week.

Nearly $1.1 billion had been raised in 47 equity offerings on the company’s Australian database in the period from April to mid-July, she said.

“It’s been great, is the short version, there is money everywhere,” Ms Turner said.

“Everything is massively oversubscribed.

“It’s a wonderful market for everybody from a capital markets perspective.

“Gold is fabulous.

“Mixed metals, nickel, copper, all good too.”

Institutional investors had been supporting resources stocks more than other sectors, while there was an inflow of retail cash through JobKeeper and JobSeeker, she said.

Association of Mining and Exploration Companies chief executive Warren Pearce said initial public offerings were up on last year.

While 74 per cent of miners had been worried in April their cash reserves would not last the year, about 62 per cent of explorers had balances of more than $1 million at the end of June, according to AMEC data.

Part of the strong performance was down to Australia’s relative safety during the COVID-19 pandemic, with outbreaks mostly controlled in resources states.

“Around the world, our competitor jurisdictions didn't fare so well,” Mr Pearce said.

“Their countries did not have such success in combating the spread of COVID.

“That impacted on their industries … many were closed at the time.

“Australia became quite rightly seen as a safe jurisdiction … a safe investment environment, away from the impacts of COVID.”

That gave Australian companies an advantage in the market, he said.