It used to be the case that to get shares in a great share market float or IPO (initial public offering), you had to be on very good terms with the right sponsoring broker and have plenty of available cash.
Both of those items are still very handy but with the requirement for a spread of at least 300 retail shareholders, online share applications, online brokers and the floating of many more small companies, getting set in a float has become much easier.
That just leaves unanswered the question of why you would take the risk of investing in a small and untested company – a question which was more than adequately covered in 2017 by the average float return to the end of the year of 61.6 per cent.
When you compare that return to the mere 7 per cent rise in the ASX 200 index for the year, there is a considerable incentive for even a conservative investor to sweeten overall returns by allocating a portion of their invested funds to new floats.
Remember too that 61.6 per cent was the average of the 113 floats during 2017 – you could have achieved much better returns by picking and choosing the right floats, even if you did pick the occasional underperformer.
As a guide to the sort of floats that may be worth considering, we are looking here at the top ten floats of 2017 so that you can see the sorts of companies that have achieved exceptional returns for investors.
As you will see they come from a variety of industries but many were exquisitely timed to take advantage of strong trends in areas such as food, minerals and health.
List of the top 10 IPOs in 2017
Here are the top 10 performing companies based on return at the end of the year.
Let’s take a closer look at each of the companies listed to see what they’re up to.
Ardea Resources (ASX: ARL)
Ardea Resources floated in primarily as a gold explorer but has since become more interesting for investors because of its cobalt exposure as the price for that battery metal soared.
Ardea raised an extra $5.54 million from sophisticated investors in September last year, leaving it with $12 million in cash to accelerate the company’s drill programs at the KNP Cobalt Zone near Kalgoorlie in Western Australia.
Ardea is aiming to move to a definite feasibility study much quicker than originally anticipated, by further defining reserves in the KNP cobalt zone at the Patricia Anne deposit at Goongarrie South and by resource upgrades at other deposits such as Black Range and Kalpini.
The results of these drill programs will be used to define mining schedules that will be integral to finalising the definite feasibility study in 2019.
The global resource at the KNP Cobalt Zone has been upgraded to 65.7 million tonnes at 0.13 % cobalt and 0.79 % nickel.
Ardea also plans use the funds to drill-out its non-core gold and base metal projects such as the Mt Zephyr gold-nickel project to help evaluate the potential for further drilling or joint venture and spin out opportunities.
Wattle Health Australia (ASX: WHA)
You would need to have been living in a cave not to have noticed that Australia has been flavour of the month for the supply of clean and green infant formula.
The fact that there are limits on how many baby food cans can be bought at any one time is evidence of the strong demand in China for Australian formula.
Baby food company Wattle Health has been charging hard on this trend, signing supply and distribution deals in the really big markets of China and India.
These deals are not just for milk formula but also for puree products that are highly sought after by the growing number of middle class consumers in these huge markets.
Wattle Health has strong connections with the dairy industry and aims to provide trusted Australian made health and wellness products for every stage of life.
Cann Group (ASX: CAN)
Cann Group has been one of the more successful of the many Australian listed cannabis players, getting a research licence to develop medicinal cannabis and also a medicinal cannabis cultivation licence.
By literally not allowing the grass to grow under its feet, Cann Group has grabbed a first mover advantage and is seizing the chance to develop the medicinal cannabis industry in Australia and to also export to overseas markets as they open up.
Cann is also developing relationships with organisations in both Australia and overseas that can supply elite genetics and collaborate on breeding programs.
Alderan Resources (ASX: AL8)
Alderan has the advantage of knowing it already has significant outcropping resources at its Frisco gold silver and copper project in Utah but with potential to be much bigger.
It will be drilling early this year to expand its current project and to firm up the prospects that it has discovered a deeper and much larger porphyry copper deposit.
There are large geophysical anomalies that are prospective for porphyry copper-gold-molybdenum systems and the drilling should confirm what it is dealing with.
There are at least four advanced exploration targets with economic potential with more targets emerging and historic mining means that there is already good infrastructure in a strong mining jurisdiction.
Elsight (ASX: ELS)
There have been several promising Israeli-based start-ups listing on the ASX and Elsight has been one of the best performers.
With listing in Israel not an appealing option, many Israeli companies have found Australia a good alternative, particularly for smaller companies that don’t have the scale for a NASDAQ listing.
Elsight is already profitable and its technology is designed for in-the-field communications.
It allows video and other data streams to be sent securely over multiple networks simultaneously, increasing bandwidth and allowing video to be streamed from the other side of the world almost instantly.
Not surprisingly, the technology was originally very useful in the battlefield where data can be split into discrete encrypted packages and then transmitted via multiple sim cards, WiFi, LAN or radio networks before being reassembled at the other end.
Now granted an exemption from exporting potential military technology, Elsight is producing civilian applications with a lower encryption standard to which further encryption can be added if needed.
Elsight has customers in Israel, South Africa, Singapore, Vietnam and Malaysia and is expanding into other industries such as logistics, transport and media.
Titomic (ASX: TTT)
3D printing is seen by some as an interesting gimmick but Titomic is a company at the forefront of turning it into a serious manufacturing engine.
Titomic is building one of the largest metal additive manufacturing machines in the world at its manufacturing facility in Melbourne that will allow it to commercially produce products at speeds of up to 45 kgs an hour.
Titomic worked with CSIRO to develop a technology that applies cold-gas dynamic spraying of titanium or titanium alloy particles onto a scaffold to produce a load-bearing structure and it has exclusive rights to commercialise the proprietary and patented process.
As an example, a single Titiomic production cell can make two bicycle frames an hour at a much lower cost than building them manually.
Titomic is continuing to collaborate with CSIRO and is looking to build 3D parts up to quite large sizes quickly and cheaply.
Cobalt Blue Holdings (ASX: COB)
Cobalt Blue is a pure-play cobalt company centred around the Thackaringa Cobalt Project near Broken Hill in NSW and is also looking to invest in energy storage and battery technologies.
Cobalt Blue has also recently signed a MOU to use its technology to determine whether cobalt from sulphide ore at Havilah Resources’ (ASX:HAV) Mutooroo copper-cobalt deposit can be recovered economically.
Mutooroo is west of the Thackaringa deposit, where metallurgical work has identified a potential processing path demonstrating strong cobalt recoveries for pyrite hosted cobalt.
The parties believe Mutooroo may have similar metallurgical requirements to commercialise cobalt.
Cobalt Blue has benefitted from the strong market for battery component metals and solid drill results at Thackaringa.
Galena Mining (ASX: G1A)
Shares in Galena Mining may have risen a lot but some analysts are tipping there is more to come from its promising Abra lead-silver project in the Gascoyne region of Western Australia.
Drilling results have returned hits of up to 53.3 metres at 10.8% lead and 20 g/t silver from 521 metres.
Other results showed two hits of around 60 metres, grading 10.6% lead and also 7.8% lead from around 400 metres.
The most recent resource estimate from 2008 was a non-JORC figure of 93 million tonnes at 4% lead and 10 g/t silver.
Broker Hartleys crunched project numbers on a potential 1 million tonnes per annum underground operation based on all in sustaining costs (AISC) of $0.75 per pound.
The broker’s estimates are based on a 9 year mine life, producing 88,000 tonnes per annum of lead and 391,000 ounces per annum of silver from around 2021.
Hartley’s also estimated a significant initial financing cost of around $180 million.
The Hydroponics Company (ASX: THC)
Like Cann Group, The Hydroponics Company has been popular with investors as it develops the medicinal cannabis market in Australia.
It has particular expertise in horticulture, with more than 17 years of cannabis sativa breeding, variety selection and growth management.
This should put it at the forefront for producing high purity cannabidiol, a new class of medicinal product that can be used to target dementia, epilepsy and a range of other neurological disorders.
Shares in Hydroponics have also been bid up strongly on news of changing export rules.
Golden Mile Resources (ASX: G88)
Golden Mile Resources is another company that has combined excellent drilling results with being involved with “fashionable metals’’ used in high technology batteries.
Recent drilling returned wide intercepts of nickel, cobalt and scandium mineralisation across the Garard prospect at its Quicksilver project in Western Australia.
The intercepts included:
– 16 metres at 1.73% nickel, 0.10% cobalt and 41 g/t scandium from 36 metres,
– 12 metres at 0.16% cobalt, 0.58% nickel and 32 g/t scandium from 32 metres; and
– 55 metres at 63 g/t scandium from surface.
More importantly, Golden Mile’s good results were repeated across a wide spaced drilling on more than 1,500 metres of strike, in order to test the depth and continuity of mineralisation throughout the Garard prospect, so the prospects for successful infill drilling look good.
Cobalt and nickel prices have also been trading very strongly recently.