Nickel Asia sparkles in market debut

MANILA, Philippines - Nickel Asia Corp. vaulted as much as 29 percent in its trading debut yesterday as investors bid up shares of the country’s biggest nickel miner amid a general market downtrend.

The company, controlled by businessman Manuel Zamora Jr. and Japan’s top nickel producer Sumitomo Metal Mining Co., opened at P19 or above its initial public offering (IPO) price of P15 each share, and climbed as high as P19.40 in early trade prior to closing at P16.50.

On the broader market, the main composite index continued to suffer a bout of profit-taking, plunging 16.71 points or 0.39 percent to close at 4,186.89. 

Nickel Asia, which accounted for more than half of the country’s nickel exports in 2009, was worth P20.097 billion as of yesterday’s close.

A total of 71.19 million shares of Nickel Asia, valued at P1.275 billion, changed hands.

The 33-year-old company raised P4.57 billion from the sale of 304.5 million shares through IPO, the biggest by a local miner.

Philippine Stock Exchange president Val Suarez said Nickel Asia received 160 percent more orders than on offer and recorded the biggest participation from local small investors in any IPO this year.

In case of brisk demand, Nickel Asia has set aside 45.675 million shares for the over-allotment option, which could raise an additional P685 million. If this greenshoe option is exercised, the company would raise a total of P5.255 billion. The company has 30 days to decide whether or not to sell more shares.

“Profit-taking marked the stock’s debut. At today’s close, however, I expect the stock to establish a floor near these levels before pouncing back to P19,” said Junie Banaag, vice-president and head of First Metro Investment Corp.’s Investment Advisory Group.

Nickel Asia, the second firm to list on the local bourse this year after Cebu Air, operates four lateritic nickel mines at its Rio Tuba, Taganito, Cagdianao and Taganaan sites.

The Rio Tuba nickel mine site is located near the southern tip of Palawan while the Taganito mine is located at the province of Surigao del Norte in the northeast corner of Mindanao Island. Cagdianao mine, on the other hand, is situated at the Dinagat Islands while the Taganaan mine lies approximately 25 kilometers to the east of Surigao City off the northern end of Mindanao.

In a briefing following the company’s listing ceremony, Nickel Asia president Gerard Brimo said the group is gearing up for one or two more nickel projects slated to come on stream by 2013. These would be in addition to seven ongoing exploration ventures in the country.

Aside from this, the company is in discussions with investors for possible copper and gold projects. “There are at least two properties that we are looking at. We will have to wait for the drilling results,” Brimo said.

Around P3.98 billion of the net proceeds from the maiden share sale will be used to fund the company’s 22.5 percent share in the $1.42-billion Taganito nickel processing plant, which will have an estimated capacity of 30,000 tons.

Other proceeds will be used to fund exploration activities and acquisition of new mining properties.

Aside from Zamora and Sumitomo, with 23.49 percent and 18.83 percent stake in Nickel Asia, respectively, other shareholders of the mining firm include investment banker Luis Virata with a 13.63 percent stake, Pacific Metals Co. Ltd. (1.13 percent), Mantra Resources (4.27 percent) and NI Capital Corp. (2.15 percent).

RU Strategies, a management consulting company specializing in the international metals, mining and electricity industries, estimated that Nickel Asia ranked sixth globally in 2009 in terms of contained nickel ore exports.