In today’s briefing:
- Austal (ASB AU)’s Placement Puts The Skids On Near-Term M&A
- De Grey Mining (DEG AU): Scheme Vote on 16 April
- De Grey Mining (DEG AU): 16th April Scheme Vote
- Austal Placement: Thematically Hot, Relatively Low Valuation
- Iron Ore Majors Guidance: Key To Understanding Supply Side in 2025
- [IO Technicals Weekly 2025/10]: Bearish Signals Deepen in IO Amid China’s Steel Production Cuts
- Sustainable Investing Surveyor Focus on Vast Renewables (VSTE)
Austal (ASB AU)’s Placement Puts The Skids On Near-Term M&A
- Taking advantage of a doubling in its share price over the last year, Austal is tapping the market to fund the expansion of its US facilities to fulfil US Navy contracts.
- Austal is placing out 52.6mn new shares (non-underwritten) at A$3.80/share – ~A$200mn all-in – a 15.6% discount to last close, and effectively tapping out its annual placement capacity.
- Provided the placement is squared away, founder John Rothwell will unload $50mn of his own stock. As such, any M&A activity is now firmly on the backburner.
De Grey Mining (DEG AU): Scheme Vote on 16 April
- The De Grey Mining (DEG AU) IE considers Northern Star Resources (NST AU)’s offer fair and reasonable. The offer is 0.119 NST shares per DEG share.
- The key condition is DEG shareholder approval. Due to the lack of a competing bid, Gold Road Resources (GOR AU), which holds a potentially blocking stake, should support it.
- The offer is attractive compared to historical trading ranges. At the last close and for a 5 May payment, the gross/annualised spread is 2.4%/18.2%.
De Grey Mining (DEG AU): 16th April Scheme Vote
- Back on the 2nd Dec 2024, De Grey Mining (DEG AU), which boasts one of Australia’s largest undeveloped gold projects, announced a merger with Northern Star Resources (NST AU).
- Northern Star offered 0.119 new shares for every De Grey share, and will hold ~80.1% of the combined entity upon a successful Scheme, with De Grey shareholders the remaining ~19.9%.
- The Scheme Booklet is now out, with a Scheme Meeting on the 16th April. Expected implementation on the 5th May. The IE (KPMG) says fair & reasonable.
Austal Placement: Thematically Hot, Relatively Low Valuation
- Austal Ltd (ASB AU) is looking to raise US$157m, with US$125m from a primary placement and the remainder, a secondary placement contingent on the primary being fully subscribed.
- The deal will be a large one to digest at 58 days of the stock’s three month ADV, representing 15.3% of its shares outstanding.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Iron Ore Majors Guidance: Key To Understanding Supply Side in 2025
- Iron ore majors guide flattish growth for 2025, while China continues to have strong iron ore imports (4.2% YoY for CY24), despite weak steel production (-1.1% YoY).
- Significant capacity growth commences in CY26 with the ramp-up of Rio Tinto Ltd (RIO AU)’s Simandou project, equivalent to 6% of global seaborne trade ~100 million tons.
- We believe the iron ore price will be rangebound until 2026 (between 100-120 USD/ton), after which it is highly probable that it will decline to 80-90 USD/ton.
[IO Technicals Weekly 2025/10]: Bearish Signals Deepen in IO Amid China’s Steel Production Cuts
- Iron ore futures declined by USD 1.75/ton last week, closing at USD 100.45/ton on March 7, trading within a narrower USD 3.90/ton range.
- Technical indicators confirm bearish momentum, with a death cross, MACD signaling weakness, and RSI nearing oversold conditions at 36.61.
- Market sentiment remains fragile due to China’s steel production cuts, declining imports, and escalating U.S.-China trade tensions, despite potential stimulus measures.
Sustainable Investing Surveyor Focus on Vast Renewables (VSTE)
- The WTR Sustainable Index was down 1.2% W/W versus the S&P 500 Index (down 3.1%), the Russell 2000 Index (down 4.0%), and the Nasdaq Index (down 3.3%).
- Energy Technology (12.8% of the index) was down 1.6%, while Industrial Climate and Ag Technology (46.2% of the index) was down 0.6%, ClimateTech Mining was down 0.2%, and Advanced Transportation Solutions (21.7% of the index) was down 4.0%.
- Top 10 Performers: LCFS, ALTA, ALLIF, LBNK, GIP, TGEN, PEGY, SX, LICY, HCNWF
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