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Mining IPOs in a modest lift-off

Mining IPOs in a modest lift-off

Stronger share market and resources recovery are fuelling floats optimism.

THE RECOVERY IN resources floats is strengthening as more exploration companies tap into rising investor sentiment towards the mining sector and initial public o erings (IPOs).

Australian Resources and Investment’s (AR&I’s) analysis identified a dozen mining companies seeking admission to the ASX through an IPO at the start of the new financial year in 2018. Although most of these floats are small and some may not close, the volume of mining floats on the ASX is the best in several years.

The window for mining, energy and resource services floats shut after the mining investment downturn intensified in 2013. Investors shunned speculative exploration companies, meaning that most had to mothball their IPO or drastically scale back their offer.

For the next five years, relatively few mining or energy companies raised capital and listed through IPOs. The resources sector is traditionally the largest source of IPOs on the ASX by volume. In strong IPO years, it can account for a quarter or more of all floats.

The spike this year in mining floats is small compared to previous float volumes in the sector. Many junior explorers are finding it hard to raise capital and list on the ASX, reflected by the number of mining companies that had to extend their IPOs.

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