22% recovery: Falcon Metals (ASX:FAL) share price regains on second day of trade

The company is recovering from its early losses yesterday as investors pile back into the newly-listed entity.

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Shares in ASX new-lister Falcon Metals Ltd (ASX: FAL) are trending up late in the session on Friday and are now trading 22.8% higher at 39 cents.

The gain is a welcome reprieve for shareholders who were left holding a hot potato overnight after the Falcon share price dropped almost 20 cents off its initial public offering (IPO) entry price of 50 cents per share.

What’s up with the Falcon Metals share price today?

There’s been no market-sensitive information out of Falcon’s camp today. However, the Falcon share price is catching bids as investors decide on how to price the company in the secondary markets following yesterday’s IPO.

Falcon was spun out from Chalice Mining Ltd (ASX: CHN) after shareholders voted strongly in favour of the demerger earlier this month.

The Chalice share price is also inching higher today — up 0.59% to $8.54 at the time of writing — albeit with less steam than its now successful gold demerger in Falcon.

Chalice decided to restructure its gold mining operations in order to focus on its Julimar Ni-Cu-PGE Project and the new West Yilgarn Ni-Cu-PGE Province in Western Australia.

Falcon raised $30 million in an oversubscribed IPO but the market wasn’t as rosy on the lofty valuation yesterday, sending the newly formed public company’s share price south on the day.

At market close yesterday, the ASX’s newest addition finished down 28% at 36 cents apiece after listing at an oversubscribed offer of 50 cents per share.

Furthermore, the ATO Class Ruling outlining the tax implications for certain shareholders due to the demerger is expected to be finalised in the next few weeks. Falcon will make an announcement when it’s finalised.

With respect to Falcon’s operations, the company advised it expected to start drilling activities at Pyramid Hill in January 2022.

Falcon also released a non-sensitive announcement today giving notice of an initial substantial shareholder, mining investor Tim Goyder, which the market may be reacting positively to.

What now for Falcon?

The admission of Falcon to the official ASX and quotation of its shares was conditional on satisfying ASX’s listing conditions.

Falcon’s share price gain today is a step back towards its listing price of 50 cents per share.

The company’s managing director, Tim Markwell, said yesterday that Falcon would further explore the gold projects spun out by Chalice.

Markwell said the assets were located in areas considered “highly prospective for gold discoveries”, with Pyramid Hill particularly noteworthy due to its location in the Bendigo goldfield and proximity to Fosterville. The Viking and Mount Jackson sites were also promising.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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