New financial year, same old resource bull market. That’s how it looks so far, anyway. Last week, Sydney-based Every Day Mine Services (ASX:EDS) went public to an enthusiastic market reception. The stock closed Friday trading at sixty five cents, up 62.5% from the IPO price of 40 cents. Not a bad day’s work.
The company is part of the boom in mining services – a modern version of the pick and shovel salesman that outfitted prospectors in the goldfields of California and Ballarat and Bendigo in the 1850s. These days, though, the picks and shovels are a little more expensive. Hence the need to tap the equity markets for some capital.
The company raised AU$8 million from the IPO. It will use that money, according to its prospectus, for capital equipment and working capital. Here’s an interesting note from the prospectus: “The capital raised will be used to drive further growth for EDMS in eastern Australia, including the purchase of new leading edge and specialist machinery to expand its service offering to both current and new resources industry clients.”
Growth in mining on the East coast? All the big mining news these days is coming from West Australia, South Australia, the Northern Territory and Queensland. Is the mining boom so good that even mining service firms on the East coast are cashing in? And if that’s good, how much better is it South Australia and Western Australia?
BHP’s (ASX:BHP) AU$7 billion expansion of uranium and copper mining at Olympic Dam near Roxby is set to create a hole “big enough to swallow Adelaide’s city centre,” reports Andrew Trounson in today’s Australian. “The open pit will be more than 3.5km in diameter and 1km deep. Copper production is expected to more than double to 500,000 tonnes a year with a mine life of around 100 years. Uranium production is forecast to treble to 15,000 tonnes.”
There are more than AU$7 billion in iron ore investments in Western Australia, and AU$30 billion in energy and liquid natural gas developments. There’s coal, copper, and uranium in Queensland. Just about everywhere you look in Australia, you’ll find mineral deposits the world wants. About the only thing in short supply is experienced mine operators who know how to get the stuff out of the ground at a profit.
Markets and Money