Your scribe has been busy compiling the commodity and geography focus of the 33 mining and metals IPOs that listed during 2012 – and taking a look at share price movements.
The compilation did not take as long as in previous years. In 2012, the new companies totalled 33 exploration-focused IPOs (excluding oil/gas and mining service companies). In 2011, it was a whopping 78 IPOs, up from 66 in calendar 2010, so 2012 was hardly a vintage year in terms of total IPO numbers.
Now to some other statistics from the IPO ‘Class of 2012’
1. Most sought after IPO commodity No surprises here. The answer in 2012 was gold. Just over 50% of the IPOs (being 17 of the 33 companies), had gold as the primary commodity of interest. Gold is a repeat, if not perennial, winner here – being the principal commodity focus for 45 per cent of the 2011 IPOs.
2. The next most sought after commodity Any guesses? Those who select coal as their first guess are correct – at four IPOs in 2012. Coal finished third behind gold and copper in 2011, but moved up a place in 2012. Other commodities in the 2012 mix include copper, iron ore, tungsten, nickel, uranium, potash and zinc – with the likes of graphite, lead, molybdenum and rare earths also in the exploration portfolio mix of the 2012 IPOs.
3. Preferred IPO exploration location Western Australia is a clear winner (being the principal focus for 15 of the 33 IPOs).
4. The next most preferred exploration location This was shared around very evenly. Jurisdictions that were the focus for two IPOs each were Indonesia, Queensland and Victoria. After that it is a scattershot of principal exploration locations, with one IPO each for Brazil, Canada, Chile, China, Congo, Mongolia, Mozambique, New South Wales, Niger, South Australia and Spain.
5. Total amount of funds raised Just $175 million in 2012 ($175.6 million before costs), down from just over $600 million in 2011 ($607.6 million).
6. The average capital raising per IPO There an average IPO capital raising before costs of just $5.3 million.
7. The largest 2012 IPO raisings The prize goes to Cuesta Coal (CQC) at $24 million, followed by Dacian Gold (DCN) at $20 million, and Paringa Resources (PNL) at $10 million.
8. Did more 2012 IPOs go up or down as measured by the share price at year end? Those guessing that winners are in the minority are correct here – although only just. That is, 14 IPOs finished the calendar year above their initial listing price – with 15 IPOs reaching the end of December below the listing price. The remaining four finished the year at par value.
9. Average 2012 IPO return This is where investment asymmetry kicks in – to the advantage of IPO investors. No IPO is capable of losing 100 per cent of its value very quickly, whereas a gain of more than 100 per cent is entirely possible. So contrary to the difficult and much maligned IPO market, an investor who acquired stock in all 33 2012 minerals sector IPO listings would have been ahead on his or her overall investment at year’s end, albeit by some 9 per cent overall. The 2012 single-digit gain of 9 per cent is a better result that for the 2011 IPOs as an aside – which finished the end of 2011 at an average 18 per cent discount to their listing value.
10. The 2012 IPO winners The 2012 minerals sector IPO gold medal goes to Equamineral Holdings (EQH), the silver medal to Boadicea Resources (BOA) and the bronze medal to Bora Bora Resources (BBR).
Good Hunting!
Allan Trench is a professor at Curtin Graduate School of Business and professor (Value & Risk) at the Centre for Exploration Targeting, University of Western Australia, a non-executive director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals and mining advisory CRU group (allan.trench@crugroup.com).
