nickel, nickel everywhere

  1. Nickel, nickel everywhere
    October 23, 2003

    A trickle of floats is becoming a flood as junior miners tap into the lust, writes James Chessell.

    Not so long ago a budding prospector with a likely patch of ground couldn't even float a cork let alone some new mining company, such was the deplorable state of the sharemarket.

    These days rising demand for metals in general and the makings of a nickel boom, in particular, mean the smaller end of the mining sector is a far more interesting place. At the moment, investors are poring over prospectuses for more than $60 million worth of exploration floats.

    "It's pretty hard to get a cab in Perth at the moment because all the geologists have found work," says Les Emery, managing director of West Australian gold hopeful Marengo Mining.

    Named after the most famous of Napoleon's many horses, Marengo is a perfect example of how investors have changed their attitude towards junior miners.

    After failing to get a $2.5 million float away in July last year, Emery earlier this week cut short a roadshow promoting the offer after three broking houses - E.L. & C. Baillieu, Bell Potter and Shaw Stockbroking - took up the stock, plus over-subscriptions of $1 million, in the first two days.



    It's not just record copper and nickel prices fuelling demand.

    As recently as two months ago, punters could have expected a junior resources stock to sink below its issue price shortly after listing but recent offerings have fared much better. Perth-based Nkwe Platinum is probably the most spectacular example.

    Investors shrugged off concerns over its speculative South Africa ground with the shares closing at $1.18 on its first day on the ASX, a 68c premium to the 50c issue price.

    Still, it is nickel, or the devil's metal, which dominates the present batch of floats.

    Yesterday, Sydney's Aim Resources announced it would spin off its nickel exploration assets and combine them with those of Canadian major Falconbridge in a new company, Discovery Nickel.

    Sponsored by Bell Potter, the $4.5 million float incorporates a suite of prospective projects in the Musgrave block on the Western and South Australian border, the Southern Fraser region of WA and Arunta block in the Northern Territory.

    "At the moment, there are a lot nickel floats coming out that weren't nickel floats two months ago in terms of the assets," says AIM executive director Morrice Cordiner. "The difference with us is it all started nine months ago and was always going to be a nickel offering."

    Like Emery, Cordiner found himself apologising to certain brokers for the lack of stock during the promotional stage.

    "At the moment, there's not enough product to meet demand," Cordiner says. "We won't have to get any money from Western Australia, there is more than enough interest in the east."

    Another junior helped by a big brother looking for large finds is Red Metal Mining. In this case, gold and copper is the target with the company a float of US-based Phelps Dodge's Australian exploration assets.

    Underwritten by Grange Securities and worth $12 million, Red Metal encompasses Phelps's extensive land around Mt Isa, Broken Hill and South Australia.

    One of the few floats to rival Red Metal in size is Nickel Australia, spun off by Perth's Croesus Mining. Headed by Jubilee Mines' former exploration manager Tony Rovira, Nickel Australia will concentrate on its Norseman tenements south of Kalgoorlie as part of a $10 million float.

    Other prospectuses on their way to investors include Pioneer Nickel, a $4.5 million float of tenements around Kalgoorlie; Cougar Metals, a $6 million float chaired by Malcolm Hillbeck; and Allied Gold, a $2.5 million offering led by Mark Caruso, an outgoing director of Andrew Forrest's Fortescue Metals Group.

    Allied is basically Fortescue's non-iron ore assets rolled into a new group.

    It intends to kick off its exploration program at the Red Dam project north of Coolgardie.
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