* Commodity prices fuel appetite for mine equity
* Financing window started to open in mid-January
* Bankers see a number of mining IPOs in the wings
By Pav Jordan
TORONTO, March 4 There's a new appetite
for equity financing in the global mining sector, as investors
tiptoe back into a market that has fretted about funding for the
last six months.
Boosted by firm metals prices and a less pessimistic outlook
for a still-fragile global economy, many mining companies are
again able to sell shares in secondary offerings or tempt
investors with an initial public offering.
"The buyers are back, the window is opening again, and there
are deals getting done for exploration," said Mike White,
president of IBK Capital Corp, a Toronto boutique firm that
specializes in equity financing for miners with projects under
The next opportunity for cash-hungry companies to strut
their stuff comes with this week's Prospectors and Developers
Association of Canada convention, known in the industry as PDAC.
If last year's figures are anything to go by, the annual
Toronto conference, which opens Sunday, could draw some 26,000
participants, bringing prospective investors together with
hundreds of explorers and miners - often small-scale outfits.
"We've certainly seen institutional money and more
accredited investor/high-net-worth-individual type money going
into exploration, and I think that will make for a great PDAC,"
said White. "I think there'll be lots of deals done."
Canada's importance as a mining capital is rarely more
evident than during PDAC, the industry's largest annual event
and a premier opportunity for investors to meet with mining
"There's been a lot of money that came out of the market
that's sitting on the sidelines looking for an opportunity to
come back in, and there has been a lack of supply of new
issues," said Chris Gratias, director and co-head of global
mining at CIBC Global Markets.
"Equity new issue volumes are down from what we would view
as a historical run rate, but when companies have come to
market, they have been very well received, and deals are getting
done on attractive terms."
Bank loans previously offered a key source of cash, but the
financial woes of Europe's banking sector make that a less
viable option now, pushing more companies towards equity
There could also be new entrants in the market as companies
take advantage of the more favorable environment to launch an
initial public offering, such as the one expected for Ivanplats,
a metals explorer controlled by Ivanhoe Mines founder
The company said in a letter to shareholders last June that
it planned to go public in late 2011 or early 2012 on one or
more major international stock exchanges. But it has offered no
update on its plans.
"We are certainly aware of a number of companies that are
considering the opportunity to access the markets through an
IPO, through a broad range of commodities, in base metals,
precious metals and bulk commodities like iron ore," said Gordon
Bell, head of global mining and metals for RBC Capital Markets
, not in reference to any deal in particular.
Canadian miners did about $223 million in initial public
offerings in 2011, down sharply from $1 billion in 2010,
according to Thomson Reuters data. Miners raised a total of
$6.87 billion in equity in Canada last year, compared with
$11.28 billion in 2010.