Australian Stock Exchange Sees Resurgence in New Listings Amid Soaring Demand for Raw Materials

Strategic Insights -

Rebadged as Zinifex, the assets of failed zinc and lead miner Pasminco are returning to the Australian Stock Exchange in an initial public offering valued at up to ADollars 1.35bn. This move comes as the zinc market experiences a resurgent demand for raw materials from China, fueled by an upbeat outlook for resource stocks and rising investor appetite for new shares. Meanwhile, clothing maker Pacific Brands has also asked investors to spend up to ADollars 1.3bn on an initial public offering as its private equity investors seek an exit. The recovery in global equity markets, upsurge in share buybacks, and higher dividend pay-outs have spawned a boom in new Australian listings, which are expected to raise ADollars 8.4bn in the coming six months.

Key Takeaways:

  • The assets of Pasminco, rebadged as Zinifex, will return to the Australian Stock Exchange in an initial public offering valued at up to ADollars 1.35bn.
  • The zinc market is experiencing a resurgent demand for raw materials from China, with prices rising about 35% during the past year.
  • Zinifex is well-located to supply the world's largest and fastest-growing regional market in the Asia Pacific, including China, which accounts for 46% of world zinc demand.
  • The company forecast earnings before interest, tax, depreciation, and amortisation (ebitda) of ADollars 300.6m in the year ending June 30 and ebitda of ADollars 366.6m in 2005.
  • Zinifex will carry low debt and does not intend to hedge sales, setting it apart from Pasminco's past approach.
  • Pasminco's assets include the open cut Century mine in Queensland, the second-largest zinc mine in the world, as well as the Rosebery mine in Tasmania and smelters in South Australia, the Netherlands, and the US.
  • Institutional investors will be offered 500m shares at between ADollars 2.10 and ADollars 2.70 each, while retail investors will receive a 10% discount.

Statistics:

  • The global zinc market is expected to account for 46% of the demand growth over the next five years.
  • Zinifex's assets include the world's second-largest zinc mine, the open cut Century mine in Queensland.
  • The London Metal Exchange prices for zinc recently reached USDollars 1,100 a tonne, up from USDollars 800 in the September quarter.
  • Pasminco's assets include smelters in the Netherlands and the US.
  • Zinifex expects to turn a net profit of ADollars 63m in 2005.
  • Pasminco posted a ADollars 272.4m net loss for the first half ended December 31, blaming ADollars 292.9m in one-off write-downs.

Sources:

  • Sydney Morning Herald, "Zinifex to list on ASX", 2004
  • Reuters, "Australia's Pasminco to be reborn as Zinifex in float", 2004
  • Zinifex press release, "Zinifex Delisted from ASX in 2001", 2001
  • Ferrier Hodgson press release, "Pasminco's administrator Ferrier Hodgson rejects OntZinc bid", 2004