Page 19 - pd290-Feb21-mag-web

Julie Athanasoff

aydirt hailed the “Return of IPOs” in February 2011, after 70
P new resources floats hit the ASX during 2010 as the sector
re-emerged after the debilitating GFC. Ten years on, rebound
was the theme again, as capital markets recovered from the
nuclear shock of the pandemic.

he Australian bourse welcomed 24 to $4.61) have filled the sector with pos- to tap a broad array of investors quickly
Tnew resources listings in 2020 (up sibilities. for further capital, while private compa-
from just six in 2019) as companies “Chalice taking off led to a rush from a nies who are reliant on one or two pri-
tapped into capital’s search for returns in whole lot of companies which had been vate shareholders have found this more
a COVID world. waiting for access to capital,” Carter said. difficult.
“Interest rates are zero to negative, so “Finding $5 million for an exploration IPO “That is not to say that listed busi-
to get the return on investment, investors suddenly wasn’t hard at all if they are half nesses don’t have challenges; but it has
need to take risk,” Morgans institutional reasonable and well managed.” brought to the fore the value of being a
sales Paul Carter explained. “Returns on Rising commodity prices inevitably had listed business and that breadth and
property traditionally takes longer, so you their part to play in sentiment. Capital depth of capital available and the impor-
look at something more liquid, i.e., equi- markets factored expected post-COVID tance of that at times like this when you
ties.” stimulus strategies into projected base really need it.”
At the same time, changes to super- metal demand while ongoing pandemic In an ASX context, first to the bourse
annuation regulations led to a flood of and political uncertainty ensured gold re- in 2020 was base metals hopeful Cobre
money entering the equities space. mained above $US1,800/oz at the turn of Ltd.
“It has been exacerbated by the su- the year, having touched $US2,000/oz in Backed by influential resources invest-
perannuation withdrawals,” Carter said. August. ing house Metal Tiger plc “validated”
“Last May saw record private client ac- The uncertainty in all facets of life may Cobre’s credentials and allowed the
count openings. And then, high-net have played a role in the reversal of a re- company to access the field of investors
worth individuals are happy to recycle cent trend for companies to shun public Attenborough described.
the returns they have made during the markets. “I think having a strategic investor that
year. They can’t have the money sitting “Over the last few years there has been is known in the sector does validate or
in the bank, it has to be put out to work.” a narrative questioning the need to go give further validation to the asset and
Coalescing with capital markets’ ap- public with companies asking: ‘Why can’t the company that they are willing to get
petite for new opportunities has been a we just keep raising private capital?’ further behind the company. I think that
remarkable run of exploration success Concerns about increasing regulatory gives other investors comfort knowing
which has seen explorers and junior min- and compliance requirements combined extensive due diligence has been com-
ers post returns not witnessed for more with the quantum of available private pleted, which some other retail or even
than a decade. capital has led to some companies stay- sophisticated investors don’t get the op-
Discoveries such as Winu, Havieron, ing private longer. However, last year’s portunity to do through research when
Boda, Julimar, Thursdays, they are choosing to invest
Gossan, Hemi and Belle- so it does give confidence to
vue have captured the im- those investors,” Cobre Ltd
agination of investors and COVID-19 has been good for WA executive chairman Martin
reignited enthusiasm for “ Holland told Paydirt.
exploration stories after al- for a few things; cheap crayfish, “There’s no question that
most a decade on the side- local exploration success and also the ability to generate the
lines. capital through the ASX
“We’ve had those suc- stopping people taking their portfolio platform is much easier
cesses, so exploration for granted. They have their normal, than privately, especially in
is driving the return on the resources sector. When
investment,” Carter said. stable portfolio but are also willing to you start to get into some-
“The likes of De Grey have some punt money. thing of reasonable size and
[Mining Ltd with the Hemi the equity raisings that are
gold discovery] and Chal- required, it is certainly the
ice [Gold Mining Ltd with way forward.”
the Julimar find] come along and peo- crisis brought home to many companies In tune with Holland’s sentiments is
ple realise what can happen with a big the benefits of being listed,” head of inter- WA Kaolin Ltd (WAK) managing director
discovery. The number of high-grade national business development, primary Andrew Sorensen.
intercepts which were rewarded by the markets, London Stock Exchange Group The Wickepin project has been incu-
market last year was remarkable.” Tom Attenborough told Paydirt. bated privately for 20 years and had no
While both are longstanding listed “Many companies had to recapitalise less than $42 million dedicated to estab-
companies, the rise of De Grey (5c/ to replenish lost liquidity very quickly as lishing an operation fit for WA Kaolin to
share to $1.55/share) and Chalice (16c the crisis hit. Listed companies were able showcase on a grander scale.

aUSTRaLIa’S PaYDIRT FeBRUaRY 2021 Page 19