Moderated, page-22

Hi Spid81,

The track record

Perth stockbroker Eddie Rigg launched a heroic broadside against his eastern states peers in hometown rag The West Australian last week, claiming that “WA companies need to use a WA broker who really understands the market, and not the east coast guys”.

It’s funny how often self-interest is dressed up as parochialism.

This was Rigg’s explanation – lead manager geography – for the disappointing performances of three recent IPOs in the resources sector: driller DDH1, African iron ore developer Genmin and gold developer Tulla Resources.

DDH1 raised $150 million through UBS, Macquarie, Bell Potter and Aitken Murray and has fallen 18 per cent since its March 9 listing; Genmin raised $30 million via Bell Potter and Foster Stockbroking and has fallen 24 per cent since its March 10 listing; and Tulla raised $78.3 million through Bell Potter and Canaccord and has fallen 44 per cent since its March 18 listing.

Because WA brokers are a real investor safe haven!

By comparison, Rigg’s firm Argonaut raised $12.5 million for Medallion Metals, which closed on Friday at 24¢, down from its 25¢ listing price on March 22. And he wants the keys to the city?But given his track record providing investors with rich opportunities for tax losses, Rigg may just live in the largest glass house in Applecross (and the ugliest; we suspect his architect had bad cataracts).

For instance, Argonaut raised $22 million for Atrum Coal in May last year at 23¢ a share. By no coincidence, Rigg’s Argonaut co-founder Charles Fear sits on the Atrum Coal board. The shares tanked to 7.4¢ on Friday after a blanket prohibition on coal exploration was reinstated over Alberta, Canada, the jurisdiction of Atrum’s flagship Elan project. There go Fear’s 1.43 million options with their 20¢ strike price. Argonaut itself has 5.3 million of the same. Sadly, the only firm likely to initiate coverage any time soon is KordaMentha.

In May 2019, Argonaut acted as financial adviser in the $US56 million debt raising for Paringa (the Kentucky coal miner, not the Mornington masters of pinot noir). The company’s principal operating subsidiary entered US bankruptcy in February.

In March 2017, Argonaut (with Macquarie) raised $110 million for Dacian Gold at $2 a share. In July 2018, they raised another $40 million for Dacian at $2.70 a share. Dacian closed on Friday at 36¢, down 87 per cent.

The moral of the story here is that in nearly every town and city on earth, there are financiers (of wildly divergent plausibility) pumping and dumping parcels of shit on the credulous townsfolk. Pick a coast – any coast.

Source: Financial Review Mar 28,2021