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Preparing for a resource IPO

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By Glenn Vassallo and Olivia Christensen Volume 7.01

Recent market movements suggest that the equities market is being sold down. While there are multiple factors at play, this is due in part to proposed changes to the banking industry in the US. When the market comes to the conclusion that this proposal is unlikely to make it through the US Congress it is expected that confidence will return to the market and we will IPO activity reach predicted levels for the first quarter of 2010.

Despite some volatility in the prices for base and precious metals, resource companies appear to be leading the charge for early 2010 listings. Last year resources stocks were buoyed by both direct demand from China and the appetite of Chinese investors to take equity stakes in resource companies, particularly where there was the possibility to also firm up a share in future off-take.

While China’s central bank has tightened policy to stem growth and prevent the swell of asset bubbles, forecast urbanisation rates for China and other Asian countries will continue to push demand in the longer term.

There is also plenty of interest from other quarters, with South Korea gearing up for significant investment in overseas energy and resource assets during 2010.

Resource companies with positive exploration results and production capabilities that are looking to tap the equities market should commence preparations now to ensure they are IPO-ready once confidence returns to the market. Some tips for resource companies to ensure that their IPO runs smoothly and on time are set out below.

The listing process is, in many respects, similar for most entities. However, aside from the usual activities that all companies need to undertake to prepare for an IPO (corporate housekeeping, liaising with ASX, due diligence, prospectus, valuations and road shows), there are a number of specific matters that resource companies should consider when embarking on their IPO journey.

Structuring the board to add maximum value to the business will be integral to the success of an IPO, with the board often finding itself under the spot light during their listing debut. Investors will not only look for the necessary skill sets to ensure that exploration or mining operations run smoothly, but will value directors with a proven track record in corporate deal making, equity raising, investor relations and taking companies from exploration into production.

Of equal importance is the selection of a listing team that has appropriate expertise and contacts to guide you through the listing process. A good business adviser will introduce you to a network of contacts with proven experience to complete the support group you will need.

House keeping aside, the company must also have a well thought-out plan for the future. For resource juniors, evidence of preliminary negotiations or the presence of existing arrangements with joint venture partners and the creation of strong alliances with strategic or cornerstone investors will ensure that investors have confidence in your ability to fund and carry out your plans. For more senior players, negotiations or arrangements with off-take partners, joint venture partners, skilled personnel to build mine infrastructure, government departments and experienced personnel who can take the business to the next level will help to demonstrate to the market that the company has the ability to access the skills and facilities necessary to turn the company’s projects into a producing venture.

With these things in place, or a solid plan to demonstrate how you’ll get there, you are ready to talk to your business advisers about getting the process started.


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PRAWN FEST 2010 BIGGER THAN EVER 12th March 2010

THE Beenleigh-Yatala Chamber of commerce is expecting to cater for around 700 members of the business community at the upcoming 14th Annual Prawn Lunch at Woongoolba this month.

It’s a far cry from the group of 40 local business leaders who originally gathered on the banks of the Logan River to feast on the multi award-winning Gold Coast Tiger Prawns, but the principal is exactly the same.

Beenleigh-Yatala Chamber’s executive office Lindsey Hamilton, says the support for the event is a reflection of the enthusiasm for both the product, and the opportunity to mix with the large number of business leaders who attend the event from all over South-East Queensland.

“These prawns are cooked fresh on the morning of the event and are the best prawns you will ever taste,” says Hamilton.

“The event attracts the who’s who of decision makers and a major appeal is the opportunity to be able to get together with all these people at the one place.”

Senior executives from key sponsors Carlton United Breweries and De Bortoli Wines are just two of the plethora of high profile business representatives that will be attending.

The 14th Annual Prawn Lunch will take place at Marks Road Woongoolba, near Beenleigh on March 12.

More info at: www.BeenleighRegion.com.au

LEARN LEADERSHIP FROM THE LEADERS 10th March 2010

FORMER CEO of Ramsay Health Care Patrick Grier heads up an impressive roster of business leadership experts presenting at the Southern Cross University (SCU) Business Insights seminar this month.

Hosted by the university’s Graduate College of Management, the latest seminar will focus on leadership and features guest lectures from Grier, associate professor Peter Miller of SCU and associate professor Carol Dalglish of the QUT School of Management.

Grier is a recipient of the Order of Australia and is recognised as one of the country’s leading CEOs.

He continues to play a corporate role as a director of major Australian companies including Ramsay Health and Prime Media and is also chair of Southern Cross University’s Foundation Board.
Grier says he will be sharing some of the keys to success at the Business Insights evening.

“Leadership is the most important ingredient for a successful organisation, especially in tough times,” he says.

“Good leadership creates a culture where everybody gives everything they can to ensure the success of the organisation.

“Leadership is the glue that holds everything together, and it’s the leader that creates the future for the organisation.”

Dalglish and Miller will be providing specific insights into leadership in the Asia-Pacific area and will also use the event to launch their new co-written book Leadership: Understanding its Global Impact.

“Most resources available on leadership in this country are adaptations of American or European books on the topic,” says Miller.

“We are very proud that our book is the first truly comprehensive book on leadership in Australasia. Leadership here is very different to leadership in America and elsewhere and we are hoping to share knowledge that Australian leaders can identify with more closely.”

The event will take place on March 10 at Southern Cross University’s new Gold Coast campus at Bilinga.

More info at: www.scu.edu.au/businessinsights.

INTERNATIONAL IT ENTREPRENUER TO SPEAK ON ‘THE NET GENERATION’ 12th March 2010

IN an Australian Institute of Management (AIM) event this month, co-founder and director of Canadian-based global online youth community TakingITGlobal.org will share his insights on recruiting and engaging with ‘the net generation’.

‘The net generation’ are on the very cusp of technology and its application, and being part of a global online community is in their DNA. They wield networks, information and content with ease and have been trained since early childhood to collaborate and hunt for information.

Michael Furdyk has shared his expertise in youth engagement at forums all over the world including the World Congress on IT, the US Government’s National Youth Summit and TED.

The 28-year-old co-founded TakingITGlobal.org, a non profit organisation focused on promoting awareness of global issues among youth, in 1999.

Since then the online community has grown to include in excess of 230,000 active members across more than 260 countries.
Furdyk has made numerous media appearances including The Oprah Winfrey Show, Time Magazine, Fast Company, BusinessWeek, and USA Today.

When he brings his unique seminar to the Gold Coast’s Sofitel Hotel on March 12, Furdyk looks beyond generational characteristics and labels to explore how this technologically savvy workforce will shape the way businesses grow over the next decade.

More info at: www.aimevents.com.au

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