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Coretrack IPO on target

by Jenny Ruth

Wednesday 16th August 2006

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 Jenny Ruth
Australia-based mining technology company Coretrack expects its initial public offer will easily exceed the minimum amount sought when it closes on Friday.

Executive director David Orth says the company already has pledges in excess of $A3 million. The prospectus aimed for at least $A1.8 million, targeted $A2.25 and allows for subscriptions up to $A3.25 million.

The offer's close has been extended twice and Orth says the reason for that was to allow sufficient time for subscriptions from New Zealand to reach its Perth head office.

He says a number of Coretrack's board members have a history in New Zealand which was the reason such a relatively small offer included this country.

Coretrack will be listed on the Australian Stock Exchange.

The issue is expected to cost between $A390,000 and $A462,500, depending on the amount raised. While that is high in relation to the amount of money sought, Orth says "it's in keeping with what's been happening in Perth of late."

The company's core proposition is technology aimed at improving the accuracy of taking core samples during oil and gas exploration activities. The prospectus says that currently actual or suspected "jamming" of core samples during drilling happens in more than 60% of cases which makes the samples completely or partly unviable for analysis, greatly adding to exploration costs.

Operating an oil rig is estimated to cost $A500,000 or more a day.

The company's technology hasn't been field-tested yet, making the venture highly speculative at this point.

Orth says the company has had preliminary discussions with those operating exploration drills about field testing. The reason the issue went ahead before testing was largely a matter of timing, he says.

The equipment itself is all but completed now. "Ideally, we would have tested it, but it wasn't quite ready. We just ran out of time. It was a matter of weeks," Orth says.

"I would like to think we would be able to test it as soon as practicable after Friday."

The technology is the brainchild of William Connell, who Orth says is "one of the premier coring people in Western Australia" and of engineer Damian Stockton who built the prototype.

While only named in the prospectus as consultants to the company, Orth says the pair are shareholders in the offer's promoter, a company called Rimoh whose director is Vincent de Villers. None of the three promoters are on Coretrack's board.

Orth says de Villers and Stockton live near each other and became friends and business partners after discussing the technology about 18 months ago. He says de Villers left the board last November when Orth became a director.

After the issue if $2.25 million has been raised, Rimoh will own 49.3% of the company, having contributed $2,151, or 0.0001 cents a share. Seed Capital investors will own 24.9% for an $809,000 contribution, or 0.074 cents a share, and those subscribing to the offer will have 25.8%, having paid 20 cents a share.

The prospectus says Coretrack will be seeking a government grant to develop and support the early commercialisation of its technology. "That's putting Australian tax dollars to work," Orth says, rating the company's chances of getting a grant as "very good. This is the kind of thing that Canberra likes us to do."

The prospectus shows Coretrack made an $87,645 net loss between July last year and April 30 this year and had cash of $629,010 at that date. It expects the company will use the funds raised for continuing development, marketing, capital equipment investment, intellectual property protection and administration over the next two years.

Coretrack has contracted to pay a company called XL5 Pty $A75,000 a year for three years. Orth says this is for marketing services.

Click here for more details on the IPO:

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