CAPITAL MARKETS

Funding continues flowing into resources

WHILE it was not a great week for the gold price and base metal prices were patchy, the junior ASX sector enjoyed some great trading days and, more significantly, further big funding inflows that again show it is very much “game on” for the resources sector.

Michael Quinn
Funding continues flowing into resources

More than $100 million was invested in placements, with the bulk of the funds coming in a handful of deals covering lithium, copper, gold and zinc.

The lithium investments in Global Geoscience and Pilbara Minerals of $30 million and $28 million respectively were the biggest.

Citigroup’s underwriting of the $30 million Global Geoscience raising was notable – with Bloomberg also reported Westpac’s newly discovered keenness to back a lithium and cobalt deal – as was Chinese car manufacturer Great Wall’s backing of Pilbara.

Speaking of Great Wall and its boosting of its leverage to future electric vehicles, BHP also entered the fray on EVs during the week.

The Big Australian’s chief commercial office Arnoud Balhuizen was quoted widely in the mainstream press as deigning 2017 as the “tipping point” in the EV revolution and suggesting it would all be very positive for BHP because of its copper production.

While that may well be so, what it will not be so good for is BHP’s oil business.

Along the same lines, doing a search for the word “lithium” in BHP’s brand new nearly 500 page annual report released this week is also interesting.

The search comes up blank. Not a single mention.

The obvious contrast here is with BHP’s main competitor Rio Tinto, whose large Jadar lithium-borate project in Serbia is undergoing feasibility work.

That is not to say BHP’s BD and M&A teams are not working furiously away in the background. Maybe they are, maybe they aren’t.

Meanwhile, back in junior land, other big raisings this week was $15 million heading the way of greenfields gold and copper explorer Xanadu for its work in Mongolia, and $8 million to Algerian zinc play Terramin.

The investor backing of big picture project plays in the arguably riskier locales – to varying degrees – further emphasises the funding phase currently underway.

Then there is the action back on home turf, with serious investors and day traders alike getting right amongst the gold action in the Pilbara region of Western Australia.

Calidus Resouces was the obvious beneficiary of that with $10 million heading its way. The company said it could have raised almost three-times that amount.

If some major exploration success starts being achieved by the many companies that have already flocked to the region, look out.

Disclosure: The reporter holds shares in BHP

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