Chariot Corporation (ASX: CC9) shares dropped 43% on their IPO today. True, CC9 shares then rose a few percent from that dismal opening price but there’s a lesson here. Even in the current white hot heat of the lithium exploration market not every offering succeeds. This despite the prospective exploration area looking good. Despite even that US political pressure to find some lithium within the US as economic nationalism takes hold. Even then a decent enough prospect can be mispriced as it seems to have been here at Chariot.
The corporate announcement: “Chariot Corporation Limited (“Chariot”, “CC9” or the “Company”) is pleased to announce that its shares will commence trading on the Australian Securities Exchange (“ASX”) at 12:00pm (AEDT) today. This follows the completion of a $9 million initial public offering (“IPO”), which closed oversubscribed on 5 October 2023. Wilsons Corporate Finance Limited (“Wilsons”) and Jett Capital Advisors LLC (“Jett Capital”) acted as joint lead managers of the IPO. At the IPO issue price of 45 cents per share, Chariot’s market capitalisation is $67.5 million.”
The CC9 shares opened trading at 25 cents which is not a grand success given that initial placing at 45 cents.
Chariot Corporation share price from Google Finance
The actual background business looks interesting enough: “The company’s flagship operation in Wyoming is its Black Mountain hard-rock lithium project with extensive pegmatite outcrops where recent sampling returned a peak result of 6.68 per cent lithium oxide. Eight of the samples returned assays of more than 4 per cent lithium oxide while the average assay across all 22 samples collected from the outcropping pegmatites came in at 2.16 per cent lithium oxide. Additional highlights include samples grading 5.24 per cent and 5.19 per cent lithium oxide.” Those are good numbers but of course they’re very preliminary.
The company also seems to have tags on pretty much every pegmatite occurrence in Wyoming. Which is a mining friendly state jurisdiction and also, obviously enough, within hte US. There’s considerable thought that within US lithium might go for a premium at some future date - it depends on how far the country goes with resource nationalism.
But the obvious comment to make here is simply that that initial fundraise was at too high a price. Thus the fall on the IPO itself.