Morning news as we make up our minds - whether to take up our entitlement or wait and see whither which way gold ..
Mungana to test gold float hunger MATHEW MURPHY April 27, 2010
THE market's appetite for floats will be tested with the launch today of a $76 million offering by Mungana Goldmines, one of the more substantial capital raisings in a recovering resources sector.
Rising commodity prices and improved equity markets are encouraging investors to abandon fears that the global economy may suffer a relapse.
IPOs raised only $2.96 billion last year, but forecasts for this year are for a much healthier $15 billion to $50 billion.
Mungana is to be spun out of Kagara's gold interests in the prospective area of Chillagoe in north Queensland.
The company will have something of a head start once its lists. It already has 1.85 million ounces of gold that is Joint Ore Reserves Committee compliant measured, indicated and inferred, as well as 180,000 tonnes of copper, and 13 million ounces of silver at its Mungana and Red Dome projects. Mungana also has access to existing mine infrastructure.
Kagara shareholders will be given priority in the Mungana offering, with about half the stock being reserved. Kagara's biggest shareholder, China's Guangdong Foreign Trade Group, will invest $23.9 million, buying it a cornerstone 16 per cent stake.
When the offering closes on May 24, Mungana will have a market capitalisation of $149.2 million. The offer is being led by Southern Cross Equities, with Macquarie Equities acting as a broker to the issue.
Kagara chairman Joe Treacy said little money had been raised in gold floats since the financial crisis.
''I think this will be a bit of a bellwether for IPOs generally but also for gold,'' he said. ''Kagara has a bit of a history for this. We were the only mining float in 1999 and that was the beginning of a charge of mining floats. I think this will give the market a lot of confidence if it does well.''
Mr Treacy is also hopeful Mungana will provide a reversal of family fortunes; he discovered while working on the project that his great aunt was murdered on the site.
''I had no idea when I started out, but it turns out my grandfather's sister was murdered at the Mungana mine,'' he said. ''She was only 20 but she was shot by some miner for refusing crib or something, and died of the infection.
''I am sure there will be a happier ending to the story this time around.''
Source: The Age
KZL Price at posting:
84.5¢ Sentiment: Hold Disclosure: Held
