Nico Resources (ASX:NC1) launches 82% following IPO

The ASX has given its newest face a warm welcome.

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Key points

  • Nico Resources debuted on the ASX at midday AEDT Wednesday
  • The Nico Resources share price is currently 36.5 cents – 82.5% higher than its offer price
  • The company is a spin-out of Metals X, taking over its Central Musgrave Project nickel and cobalt prospects

Nico Resources Limited (ASX: NC1) has finished its initial public offering (IPO), launching onto the market this afternoon to the delight of investors.

In the wake of its debut, the Nico Resources share price has surged a massive 82.5% higher than the offer price in its prospectus.

At the time of writing, the company's stock is swapping hands for 36.5 cents apiece. That's well up on its offer price of 20 cents.

Let's take a look at the company and what went down during its IPO.

What does Nico Resources do?

Nico Resources is a spin-out of Metals X Limited (ASX: MLX), taking on its former parent company's nickel assets.

The ASX newbie has walked away from Metals X with the Central Musgrave Project – made up of around 2,000 square kilometres of prospective exploration tenure, including the Wingellina Project, the Claude Hills nickel deposit, and the Mt Davies exploration prospects.

The project's tenements host mineral resources of more than 200 million tonnes. They contain 1.95 million tonnes of nickel and 150 thousand tonnes of cobalt.

It also has a probable ore reserve of 164.8 million tonnes containing 1.56 million tonnes of nickel and 123,000 tonnes of cobalt.

Nico Resources share price surges 82% on ASX IPO

Not all ASX IPOs turn out as well as Nico Resources' has. The company's stock has soared a massive 82.5% higher than its offer price within a few hours of its debut.

The company floated at midday AEDT and reached an intraday high of 37.5 cents – representing an 87.5% gain.

Nico Resources' IPO saw it offering 60 million shares at 20 cents apiece. That raised $12 million – the pinnacle of its prospectus' expected range.

The funds will go towards advancing the Wingellina nickel-cobalt-scandium project to development as well as various exploration programs determining how to exploit potential high-grade zones of nickel, cobalt, and scandium.

It will also help fund one review of mineral processing routes to maximise the Central Musgrave Project's minerals' value and another of historical data to find information or programs needed to undertake a feasibility study update.

Following Nico Resources' IPO, the company's CEO Rod Corps and chair Warren Hallam are expected to hold respective stakes of 25% and 29.17%.

Additionally, Metals X will hold 18.33% of the company's outstanding shares. Nico Resources' IPO is expected to include a distribution to eligible Metals X shareholders.

Following the IPO, Nico Resources expects to have 91 million shares on offer – giving it an assumed market capitalisation of around $18.2 million based on its offer price.

However, at its current share price, it has an assumed valuation of approximately $31.5 million.  

Motley Fool contributor Brooke Cooper has no position 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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