Succesful Fusion

FUSION Oil & Gas debuted on the AIM in September with an institutional placement of 92.5 million shares.

Fusion managing director Alan Stein says the company with oil and gas interests in West Africa intends the AIM listing to be its only listing, following a joint venture with West Oil on the ASX in 1997-8 which proved how difficult it was to raise seed capital when the market went from hot to cold.

In 1999, a $5 million capital raising in London confirmed a better understanding by investors of the international oil and gas sector, and a higher comfort level with international projects and African investments.

Embarking on an AIM listing, Fusion found itself valued significantly higher in the UK.

As with Consolidated Minerals, Fusion recommends investing in a home-based broking firm to advise on the process, even though this may turn out to be “reassuringly expensive”.

And while legal costs made up 53 per cent of the total listing bill, the best value for money came from public relations expenditure.

“The valuation uplift for a new company makes the cost acceptable,” Mr Stein says.

Mr Stein also warns the cost of failure to list after entering the process can be quite significant and that ongoing costs to maintain the listing do dictate the minimum size of the initial capital raising.

Fusion found fixing the IPO issue price was an issue between the sales team and the company and Mr Stein recommends getting some cornerstone investors to buy in at the company’s preferred price a few days prior to the listing.

One disturbing aspect of the process was the late presentation to Fusion of the placing agreement, concerning warranties and indemnities, just two days prior to listing.

No AIM for HiTec

ONE company needing to raise capital but not going down the AIM route is HiTec Energy.

HiTec needs to secure finance after an investment bank due diligence report that deemed the company’s Electrofuel project both technically and commercially viable. But HiTec has revealed in its first quarter report that it recently investigated, but ruled out, an AIM listing, mainly due to the expense.

The company now needs to acquire an operating and financing revenue stream sufficient to achieve bankability on the back of the due diligence report, and is talking with potential customers and strategic investors in Japan, Europe and the United States.

HiTec’s Electrofuel project produces high quality electrolytic manganese dioxide (EMD) at both a comparatively low cost and environmental impact, and EMD produced from the company’s demonstration plant has been favourably received by major battery manufacturers.

Demand for the use of EMD in alkaline batteries is expected to increase, as is a new use, the manufacture of lithium manganese oxide rechargeable batteries as used in electric and hybrid electric vehicles.

It is in this context that HiTec is understandably keen to obtain bankability so it can construct its planned full-scale commercial production plant at Port Hedland.

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