TORONTO Feb 22 Initial public offerings in the
Canadian market may be dead right now, but a bevy of publicly
listed gold miners is scrambling to push through equity
offerings to capitalize on a bullion price pop, bankers say.
With the price of gold above $1,200 an ounce for the
first time in eight months, about half a dozen players are keen
to take advantage of market conditions, said two bankers who
asked not to be named to protect client relationships. They
declined to identify the potential issuers.
"We're in a lot of dialogue. We expect there's going to be a
few more," said the first banker, adding only select names will
be able to tap the market and that the quality and structure of
any offering remain key.
He expects most of the capital raises to range between C$20
million ($14.58 million) and C$150 million but sees chances of a
bigger offering from a mid-tier or large companies.
"The bigger hurdle is who can come to market, not who wants
to come," said the source. "It's a buyer's market for sure."
Erik Goldsilver, a partner at law firm Borden Ladner
Gervais, said it will be harder for early stage exploration
firms to raise money, as investors still view that part of the
market as too speculative.
Many investors fled the sector amid a broader slump in gold
prices and stock values since 2011.
Still the roughly 14 percent rally in the price of spot gold
this year has at least some looking at bullion miners
Canadian gold miners have raised C$1.47 billion in the year
to date in Canada, up from C$1.2 billion over the same period
last year, according to Thomson Reuters data. The numbers
obscure the fact that there have been just four such secondary
equity offerings from gold miners this year, down from 14 a year
Roxgold recently announced a C$20 million offering,
shortly after Osisko Gold Royalties' C$150 million
Those offerings were dwarfed by Franco-Nevada Corp's
$920 million equity issuance, which was upsized from a
$550 million offering. The proceeds are largely being used to
fund the acquisition of a precious metals stream from Glencore's
Antapaccay mine in Peru.
With the success of the Franco offering, the second source
expects a flurry of capital raising among Canadian gold miners
over the next month if bullion prices remain favorable.
($1 = 1.3713 Canadian dollars)
(Reporting by Euan Rocha; Editing by Cynthia Osterman)