Not all initial public offerings (IPO) can be a roaring success. Sadly, some must flop, and the Armada Metals Limited (ASX: AMM) share price has done just that on its first day on the ASX.
The company's stock floated on the market at 12:30 pm AEDT today after raising $10 million through its IPO, wherein it offered shares for 20 cents apiece.
Unfortunately, the Armada Metals share price has ended its first day on the ASX 22% lower, with its shares trading at 15.5 cents.
Let's take a closer look at the ASX newbie and the IPO process that led it here.
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What does Armada Metals do?
Armada Metals is a base metals explorer with a focus on under-explored regions of Africa.
Armada believes the electric vehicle market will demand increasing amounts of 'green' metals in the coming years, and Africa is a great place to find them.
It's currently exploring a multi-target project opportunity for magmatic nickel-copper sulphides in the Nyanga area in southern Gabon. There, it has 2 exploration licences covering 2,991 square kilometres.
Armada Metals has already spent more than US$10 million at the mining sites and has targets ready to drill.
Armada Metals share price slumps on ASX debut
Today was tough for the Armada Metals share price.
The company sold 50 million shares – its maximum planned issuance – during its IPO and raised $10 million in the process.
Most of those funds will go towards exploration activities, mainly drilling programs and regional exploration. The rest will be used as working capital and for covering administration expenses.
At its offer price, the company expected to list with a market capitalisation of $20.8 million.
Instead, at its current share price, Armada Metals has an ASX valuation of about $7.75 million.
On the company's ASX float, Armada managing director, Dr Ross McGowan commented:
Today signifies the beginning of Armada's exploration journey as a public listed company… The company is excited to commence its maiden drilling program in the new year, and we look forward to providing shareholders with exploration updates as we prepare the company for growth and future success.
