Nickel Asia Corp. (Nickel Asia) shares closed 10 percent up from its P15 initial public offering at P16.50 during their first day of trading yesterday.
The pullback from the day’s high of P19.40 disappointed market expectations of P20 a share based on the company’s prospects.
Traders blamed market volatility which they said would eventually settle down and push the stock’s price higher.
The company’s fundamentals will come into play in the next few days, Alakor Securities general manager Victor Benavidez said.
Nickel Asia listed with the Philippine Stock Exchange a total of 1.34 billion shares after offering to the public 304.5 million shares. It has an option to sell 45.68 million more shares as part of the initial public offering.
From the IPO, Nickel Asia earned P4.57 billion, a big portion of which will be used for the company’s planned $1.3 billion high-pressure acid leach nickel processing plant in Surigao del Sur, to be built in partnership with Sumitomo Metal Mining Corp. and Mitsui and Co.
The offer was the largest mining IPO to be held in the Philippines, the company said.
At the sidelines of yesterday’s listing, company officials reiterated their optimism on the growth of the company as output increases and nickel prices improve.
Nickel price is projected to hit $11.9 per pound by 2012 after hitting $11.3 per pound next year, according to Nickel Asia president Gerard H. Brimo.
Nickel Asia vice president Dennis Zamora said the operation of its processing plant will boost output and increase the volume of high-grade nickel shipment to Japan, the company’s main market.
High-grade nickel ores, with nickel content of at least 2 percent, are sold to Japan while low-grade ones are sold to China. Nickel Asia holds a 25 percent market share in Japan, while it holds 18 percent in China.
"Wherever demand is, we will supply it... Going forward, the shipment to Japan will increase in proportion given the new 30,000-ton plant which is projected to open in the latter part of 2012," said Zamora.
Brimo expressed confidence that nickel demand will continue to exceed supply given China’s projected economic growth of 8 percent and above. China has been the biggest consumer of nickel ore which it feeds to its smelting plants.
China consumes 37 percent of all nickel production in the world and this is projected to grow 30 percent per year from 2007 to 2012. Global average growth on the other hand is only 3.5 percent.
A portion of the IPO proceeds will also be used for exploration as the company diversifies into gold and other minerals.
Brimo said the initial figures for two of its seven prospects need confirmation and feasibility studies. These could be made operational by 2012 or 2013.
Nickel Asia has three exploration properties adjacent to its Taganito mine, which will provide the feedstock for the new plant.
"And also in the mine itself, there are open areas for drilling," Brimo said
The company said it is also in talks with a possible partner for the exploration of a potential copper-gold deposit in the former Anglo-American property in the Cordilleras.
Nickel Asia operates six nickel mining sites and has a small interest in a nickel processing plant in Palawan, Coral Bay Nickel Corp., which is 10 percent held by the company in partnership with Sumitomo Metal, Mitsui and Nissho Iwai-Nichimen Holdings Corp.
