Interest rates near zero or negative, uncertainty about whether we are heading for inflation or deflation, the growing global debt mountain, central banks prolifically printing money — all of these swirling scenarios may be creating an increasing appetite for metals as a hard asset.
While the big funds can actually trade in metals derivatives, others may be seeing mining and exploration equities as the best available proxy for the metals themselves.
Our exploration and mine development companies are now raking in sums of money from placements and entitlement issues that would have been inconceivable just a few years ago, suggesting that investors are seeking safety in metals.
Moreover, while the placement and share purchase plan successes have largely so far been association with the gold (and silver) enthusiasm of recent months, there are signs that this enthusiasm is now spilling over into other metals.
Tuesday morning’s session on the Australian Securities Exchange was another busy one for oversubscriptions.
Investors still favour gold raisings
Gold continues to feature heavily with investors, most spectacularly with Austar Gold (ASX: AUL) getting big support for its Morning Star mine revival project in Victoria.
It had set out a $1.96 million placement to institutional, sophisticated and professional investors — and received bids to a total of $6 million.
The placement was in addition to the entitlement offer to shareholders, with the plan being to raise a total of $3.2 million between the two.
Gibb River Diamonds (ASX: GIB) seems to have benefitted from adding gold to its suite of Western Australia diamond projects.
Last week the company began a maiden drilling program at its Edjudina gold project in the eastern goldfields on ground that had last produced gold in 1921.
This week Gibb River announced an oversubscribed share purchase plan — the target had been $600,000 but the directors have decided to accept the $1.09 million worth of applications. The extra capital will go to support the gold drilling program.
Latin Resources (ASX: LRS) found success with its placement of $652,000 to support exploration of the Yarara gold project on the Lachlan Fold Belt in NSW.
It was oversubscribed by $102,000.
Lithium, magnetite, iron ore also attracting support
Investors clearly could not get their money in quickly enough to help kick along the development of the Riley iron ore mine in Tasmania owned by Venture Minerals (ASX: VMS).
The company had offered $1.5 million worth of new shares through a share purchase plan — but investors applied for $3.6 million worth of shares, which was a 240% oversubscription.
This was on top of $4 million raised last month through a private placement.
The shareholder applications are to be scaled back to $2.5 million, and the money will be used to ramp up mining at Riley as well as on the company gold and copper-gold projects
Hard rock lithium is also getting support even with its present price challenges.
Infinity Lithium Corporation (ASX: INF) will bank $2.2 million from a placement to advance the San Jose project in Spain, with European and resource fund investors backing the raising.
Australian shareholders will be given an entitlement offer on the same terms as the placement.
Magnetite has an enthusiastic backer on the share register at Freehill Mining (ASX: FHS) to judge from another recent raising.
Shareholder (and sophisticated investor) Gavin Ross earlier this year made a trip to Chile to look over the company’s Yerbas Buenas magnetite project there.
Mr Ross then followed up that visit by investing in several placements including another $600,000 at the start of August – money that will enable the company to finance exploration work and the feasibility study now underway.