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CANADIAN PERSPECTIVE: Purse strings begin to loosen

It has been 13 months since Toronto's Sprott Inc. went public, raising $200 million on the Toronto Stock Exchange (...


It has been 13 months since Toronto’s Sprott Inc. went public, raising $200 million on the Toronto Stock Exchange (TSX). That was followed by the global market meltdown which left many mining companies unable to raise capital. The tide seems to have turned now that Magma Energy of Vancouver has successfully floated a $100-million IPO on the TSX. Its shares will begin trading on July 7 under the symbol MXY.TO.

 

Admittedly, a geothermal energy producer is not an exploration or mining company, but Magma’s success should alert the public that companies which drill for things are worthy of investment consideration. We are already seeing positive results from other types of offerings in June.

 

The number of financing and placements that reached my inbox last month numbered close to 150. They were small (a couple hundred thousand dollars), medium ($5 million to $20 million), and large (in the $100-million neighbourhood). I am pleased to see that the money is again beginning to flow; I hope recession-weary investors are actively seeking new opportunities.

 

Here are some of the notable deals completed in June.

 

To refurbish the Aurbel mill near the Lac Herbin gold mine near Rouyn-Noranda, QC, Alexis Minerals has raised C$10 million plus an overallotment by issuing flow-through shares.

 

Banro Corp. sold 43.8 million common shares to raise of C$100 million. The company plans to spend C$75 million of the amount to advance its gold projects in the Democratic Republic of Congo, specifically in the Twangiza-Namoya Gold Belt.

 

Canada Fluorspar raised a modest $C2 million from a flow-through offering. The proceeds will be used as working capital in hopes of reopening at the company’s St. Lawrence fluorspar mine in Newfoundland.

 

Uranium producer Denison Mines raised C$94.9 million thanks to an investment by Korea Electric Power that purchased a 17% interest in the Canadian company.

 

Detour Gold issued 4 million common shares to raise C$48.4 million which will be used to advance the feasibility study for its Detour Lake gold project in northern Ontario. The in-pit resource is approximately 13.2 million contained oz.

 

First Nickel has raised a US$10-million convertible working capital facility maturing on Dec. 31, 2013. The funds will be used to begin incremental development at the Lockerby nickel mine near Sudbury. A full-scale capital development will be undertaken when the appropriate financing can be arranged.

 

First Quantum Minerals has raised US$500 million though the placement of 6% convertible bonds due in 2014. The debt will give the company flexibility to repay or renegotiate shorter-term debt, expand operations and make potential acquisitions.

 

The 7.8 million shares issued by Inmet Mining raised a gross amount of over C$348.2 million with which the company will repay the debts it undertook to complete the Las Crucas copper project in Spain.

 

Northern Freegold has raised C$5 million though a bought deal equity financing to fund ongoing exploration at its Freegold Mountain gold project in Yukon.

 

The modest amount of C$3.9 million is the target set for Victory Nickel‘s rights offering to its existing shareholders. It is investigating the Minago, Mel and Lynn Lake nickel properties in Manitoba and the Lac Rocher nickel property in northern Quebec.

 

The above list contains 10 reasons to be optimistic about the future of Canadian juniors and producers. There are many many more. Spread the word, and maybe the money will really being flowing again. At least I feel confident that the worst of the recession is over for the mineral industry.


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