A good barometer of the state of the Australian resources sector is the number of successful IPOs and their performance since listing, and if 2017 is anything to go by it looks like the tide has turned for the industry.
So far this year, there have been 20 successful new listings, according to S&P Global Market Intelligence data, and there are about 10 more still aiming to list before the end of 2017. By comparison, just 10 companies that undertook IPOs to list on the ASX made the boards in 2016.
The uptick in sentiment is also reflected in the price performance of the S&P ASX 300 Metals & Mining Index. The index bottomed out at about 1,639 points in January 2016, marking a significant 55% decline in price performance since the end of 2012, when it was sitting at about 3,643 points.
However, the index is again on an upward trajectory and has made a substantial turnaround to claw back to levels it was sitting at in late 2014.
Nearly half of the companies that have made their debut on the ASX this year have traded at substantial premiums since listing, which is also a good indicator that investor sentiment has picked up for resources companies.
The biggest gainer has been U.S.-focused base metals explorer Alderan Resources Ltd., which has climbed 770% since it listed on the Australian bourse in early June following a heavily oversubscribed IPO that raised A$8.5 million. On its first day of trade, Alderan's share price shot up 95%.
The company owns the Frisco project in Utah, which hosts three copper-zinc-lead-silver-gold advanced exploration targets and a possible fourth prospect. The company started a 10,000-meter diamond drilling program at the historical Cactus mine in late September.
Ardea Resources Ltd., meanwhile, may have closed down 10% on its ASX debut in February, but the company that was spun out of Australian base metals explorer Heron Resources Ltd. has so far notched up gains of 320%.
The company's development focus is the Lewis Ponds gold-zinc project in New South Wales, Australia, and its exploration focus is the Mt Zephyr and the Bardoc Tectonic Zone gold projects in Western Australia.
Further indicating the strong investor interest for gold players, Okapi Resources Ltd. traded at a 70% premium to its IPO price on its first day on the ASX in late September and the company is still trading at about 60% above its listing price.
Gold and nickel explorer Blackstone Minerals Ltd. made modest gains on listing and has continued its upward trajectory. The company's shares are up over 50% since it debuted in January.
Companies are also raising more cash under their IPOs in 2017 than in 2016. Last year, just one company, Horizon Gold Ltd., raised A$15.0 million, while the other IPOs recorded by S&P raised less than A$10.0 million. Horizon was spun out of Panoramic Resources Ltd. to take control of the company's Gum Creek gold project in Western Australia.
This year, four of the companies that listed raised over A$10.0 million, with Nusantara Resources Ltd.'s IPO the highest at A$16.2 million. The company, which was spun out of One Asia Resources Ltd. earlier this year and is headed by former Sandfire Resources NL COO Michael Spreadborough, owns the Awak Mas gold project in Indonesia.
The resources companies that have listed so far in 2017 have collectively raised A$134.6 million, a 125.1% increase so far over 2016, while the average IPO amount raised has climbed 12.4% to A$6.7 million.