New ASX listing requirements could have significant impact on junior explorers according to a recent report from S&P Global Market Intelligence. Research finds that 212 ASX-listed companies would not meet newly proposed thresholds.
Recently proposed changes to listing requirements for companies on the Australian Securities Exchange (ASX) have the potential to significantly affect the junior mining sector in Australia according to S&P Global Market Intelligence’s latest DataWatch report. Although the changes are focused on initial public offerings and back-door listings, at least 212 ASX-listed junior miners would currently fail the revised “assets test” criteria.
As currently proposed, the new listing requirements pertaining to those entities applying under the “assets test” include increasing the minimum financial thresholds (net tangible assets greater than A$5 million or market cap greater than A$20 million) and having audited financial reports for the past three years. In addition, new listings would be required to have a larger free float (20%, up from 10%) and a different shareholder spread (100 shareholders each with at least A$5,000 in shares).
Based on the most recently reported net tangible assets and a market capitalization as of June 3, there are 212 ASX-listed companies that would not meet either of the newly proposed thresholds. Among these, 27 have a market capitalization of A$10 million to A$20 million, 55 have net tangible assets of A$3 million to A$5 million, and eight fall between the current and proposed figures in both categories. A total of 138 companies on the list also fail to meet the current assets test criteria (market capitalization less than A$10 million or net tangible assets below A$3 million).
Juniors such as Explaurum Ltd and Canyon Resources Ltd find themselves in the unique position of falling just short of both the new market capitalization requirements and the new tangible asset requirements. Explaurum reported tangible assets of A$4.7 million at the end of the December 2015 quarter and had a market value of A$15.4 million, while at the end of May, Canyon Resources reported A$4.4 million in tangible assets and a value of A$19.4 million.