Chrysos Corp embarks on biggest IPO of 2022: Bids today looking for $6.50 a share

After investing time recently winning support from fund managers for its underlying growth story, gold testing disrupter Chrysos Corporation is understood to be close to finalising terms for its initial public offering (IPO).

It’s understood a deal is expected to surface that ascribes market value at around the $600m, while an IPO is expected to be in the vicinity of $200m.

What does the company do?

To the uninitiated, the company - which counts the CSIRO as a major shareholder - is a market leader in gold mining analysis technology.

Founded by the CSIRO, Chrysos provides analysis for the gold mining sector through its PhotonAssay technology.

In summary, the company uses high-powered X-rays to pound rock samples on-site and activate atoms of gold and other metals. It’s understood that a detector can determine their concentrations within minutes.

Instead of selling its large PhotonAssay units outright to customers, Chrysos leases them, hence ensuring a regular earnings stream through maintenance and servicing.

Is the timing all wrong?

Despite early indications of strong investor demand at the $600m level, what will clearly play on investors’ minds is the ‘toppiness’ being experienced by commodities amid underlying weakness, courtesy of geo-political instability.

Revelations that the [physical] gold price could be entering a protracted period of underlying weakness is hardly going to fill prospective investors with greater enthusiasm.

But Chrysos is by no means exclusively wired to gold, with the company’s environmentally-friendly analysis also being applied to silver and complementary elements.

Much of the technology’s popularity can be attributed to its rapid displacement of slower, more hazardous and costly processes.

IPO Timing

In light of the chequered track-record experienced by IPOs in recent times, fund managers like Regal Funds Management, Wilson Asset Management and Tribeca Investment Partners -which already own Chrysos - will now have a vested interest in the company being attractively priced at IPO.

This new cohort of fund managers became shareholders following a $50m fundraising in early September, which valued the company at around $450m.

However, not all shareholders have decided to remain with the listed entity, with mining services contractor Perenti Global (ASX: PRN) formerly Ausdrill - which holds 8% of Chrysos - flagging plans to head for the exit during the $200m-plus capital raising.

Meantime, the jury’s also out of whether the CSIRO – instrumental in commercialising the technology – which still holds 23%, will remain on the shareholder registry post-listing.

Prospectus pending

With the listing earmarked for late April or in early May, best guesses would suggest a prospectus will be lodged within the next few weeks.

Working on the float is lead manager is Barrenjoey, which this afternoon was calling for bids at $6.50 a share. This would value Chrysos at $535m on an enterprise value basis and $637m in market cap.

A sneak-peak at offer documents reveals that Chrysos expects $13.7m revenue and $925,000 earning (EBITDA) in FY22, increasing to $26.6m and $3.2m in FY23.