Brokers pocket big fees as gold-focused capital raisings leave many investors underwater

Argonaut Securities played a leading role in a busy fortnight of capital raising, joining Barrenjoey Markets on Wiluna Mining’s $180 million IPO and teaming with Canaccord Genuity on Ballard Mining’s $45 million placement, giving the Perth broker involvement in about $225 million of gold-sector fundraising. CommSec appeared on both transactions as a co-manager.

Other notable mandates included Taylor Collison on Maronan Metals’ $20 million placement, Euroz Hartleys alongside Canaccord on Torque Metals’ $25 million placement, and US-based Baird and Lake Street Capital Markets on Amaero International’s US$20 million (A$28.7 million) public offering. Smaller brokers active over the period included Aesir Corporate, GBA Capital, Veritas Securities, Prenzler Group, Morgans and Ord Minnett.

The upfront receipts for underwriters and brokers were substantial. Amaero’s US$20 million deal attracted underwriting discounts and commissions of US$1.4 million, about 7 per cent of gross proceeds, and included a 30-day option to buy a further 705,882 shares. Several smaller raisings bundled six per cent cash fees with multi-million option packages that, on paper, reached double-digit percentages of the capital raised.

Aftermarket trading told a different story. By 10am Perth time on Friday, only two of the ten stocks analysed were trading above their issue prices. Eight were below their offers, including a placement that still required shareholder approval, leaving many new investors with immediate paper losses.

Wiluna Mining supplied the period’s largest transaction. The company raised $180 million in a return to the ASX led by Barrenjoey and Argonaut, with CommSec as co-manager. The IPO price was 65 cents, but the stock closed its first session at 56 cents and was trading at 50.5 cents on Friday morning, a 22.3 per cent fall against the issue price. Prospectus figures show about $8.5 million budgeted in joint lead-manager fees plus 5.24 million three-year broker options exercisable at 84.5 cents.

Ballard Mining’s placement raised $45 million through the placement of 68.2 million shares at 66 cents, a 7.7 per cent discount to the previous close. The placement price represented a 16.2 per cent cut to the 10-day VWAP. Ballard also ran a share purchase plan targeting $5 million, which could boost the company’s balance to about $94.1 million if fully subscribed. The stock was trading at 60.5 cents on Friday, 8.3 per cent below the placement price.

Amaero’s US listing produced one of the few clear wins for subscribers. The company issued 4.71 million US common shares at US$4.25 each, equivalent to 15.22 cents per ASX CDI, and the CDIs traded at 19 cents on Friday, a 24.8 per cent gain over the offer. The company earmarked up to US$10 million for manufacturing equipment with remaining proceeds for working capital and research.

Other raisings had mixed outcomes. Torque Metals placed shares at 19 cents to raise $25 million, but the stock had slipped to 16.5 cents by Friday, a 13.2 per cent decline. Maronan Metals secured a $20 million placement at 40 cents with Taylor Collison as lead manager and saw major shareholder Kinterra lift its stake to 22.99 per cent; that placement still needs shareholder approval on 4 November, and Maronan was trading at 38.5 cents, below the proposed issue price.

Small-float deals delivered some of the largest broker compensation relative to funds raised. Identifai Genetics raised $10 million at 20 cents with Aesir Corporate as lead manager; Aesir earned a 6 per cent cash fee of $600,000 plus 10,154,970 options exercisable at 25 cents, prospectus-valued at $899,000, putting the combined package near $1.5 million, roughly 15 per cent of proceeds. Identifai traded at 49 cents on Friday, a 145 per cent rise from the offer.

Europa Metals raised $4 million at 20 cents with GBA Capital as lead manager. GBA’s cash fee of $240,000 and five million broker options exercisable at 30 cents were prospectus-valued at about $561,000, combining to about $801,000, or 20 per cent of the IPO proceeds. Europa was trading at 19.5 cents on Friday, slightly below its issue price and leaving the options out of the money.

Veritas and Prenzler coordinated a modest package for Cooper Metals, arranging a $2.15 million placement and fully underwriting a $2.7 million entitlement issue. The brokers collected cash fees, facilitation shares and 10 million broker options exercisable at 15 cents, with the facilitation shares carrying 12 months’ escrow; the combined cash and facilitation-share value equated to about $741,000 before any valuation of the options. Cooper was trading at 7.2 cents on Friday, placing placees marginally below their issue price.

Other transactions included Azzuro Resources’ strategic placement of $3.06 million to Hong Kong-based Kerry Resources Logistics at 1.5 cents per CDI, a 7 per cent premium to the previous close, which would leave Kerry holding about 19.9 per cent and open the prospect of a board nomination; Azzuro was trading at 1.4 cents on Friday. Recharge Metals raised $4.13 million via a placement at 3.6 cents with Canaccord and Ord Minnett as joint managers, carrying broker fees up to 5 per cent, and the stock traded at 3.2 cents on Friday.

The fortnight made clear that sizeable broker commissions and option packages are a feature of both large and small raisings. For investors, immediate aftermarket moves varied sharply from strong gains to meaningful losses within hours of listings and placements completing.