What’s old is new again in mining, as a silver producer prepares to take a second stab at an initial public offering.TimArbaev/The Globe and Mail
What's old is new again in mining, as a silver producer prepares to take a second stab at an initial public offering.
Sunshine Silver Mining & Refining Corp. is auditioning investment banks for starring roles in an IPO on the Toronto Stock Exchange, according to sources pitching the company. The Denver-based firm filed to go public in 2011, with plans to raise $250-million, but could not complete the financing.
Sunshine needs capital for projects in Mexico and Idaho, where it plans to reopen a property that produced 365 million ounces of silver from 1904 to 2008. Executives at Sunshine could not be reached for comment.
There has not been a mining IPO on the TSX since July, 2015, due in large part to weakness in the price of both precious and base metals. The year 2016 was the worst on record for Canadian IPOs, according to surveys done over the past two decades by accounting firm PwC, with just eight new offerings on all Canadian exchanges that raised $466-million.
"It's sometimes darkest before the dawn," said Dean Braunsteiner, the national IPO leader at PwC. "The year after the previous market low of 2008, the IPO market in Canada bounced back to $1.8-billion in 2009 and $5.5-billion a year after that."
Recent increases in the price of many commodities have opened the door to mining-company debuts. Gold prices have jumped by more than 8 per cent since December, while the price of silver has risen more than 11 per cent over the same period.
Toronto-based Superior Gold Inc. is in the process of raising $15-million to fund the acquisition of properties in Australia, with the offering expected to close this week. The company has veteran leadership in CEO Chris Bradbrook, the former head of New Gold Inc. GMP Securities is leading the IPO.
Offerings from Superior and Sunshine are consolation prizes for what Canadian investment banks long viewed as a monster IPO candidate – the potential sale of a stake in mining giant Vale SA's base-metal assets, which would mark a return of Inco to public markets. While tantalizing, that spinout is now seen as highly unlikely.
Vale acquired Inco for $19-billion in 2006, near the peak of the last commodity cycle, building a large base-metals operation. For the past three years, there was speculation that the Brazilian company would sell a minority position in the unit to pay down debt.
The deal never happened in part due to differing views on what the business is worth. Investment bankers who have worked with Vale said the company's expectations on what the base-metals unit would fetch in an IPO were well above what institutional investors indicated they were willing to pay.
Instead, Vale has found other places to raise capital, selling a fertilizer business to Mosaic Co. in December for $2.5-billion (U.S.).
Andrew Willis