Robert Friedland, the mining entrepreneur who became a billionaire thanks to a touch for finding big base-metal deposits, is taking his latest venture public on the Toronto Stock Exchange.
The offering will be a litmus test of whether recession-wary investors will once again risk money on promising but far-flung mineral ventures.
Mr. Friedland’s Ivanplats Ltd. will seek at least $300-million in the initial public offering, said a person familiar with the plans, after considering going as high as $500-million.
Documents for the transaction were filed with Canadian regulators on Tuesday, but they did not include any details on size and price, which are supposed to remain private until closer to the offering date.
At $300-million, the transaction would be one of the largest of the past two years, which have been quiet for initial public offerings as markets have seesawed and investors have avoided risk.
A successful offering from copper miner Ivanplats, along with a pending one from international miner Intergeo MMC, set to list in Toronto, will help cement Canada’s reputation as a go-to market for aspiring global mining companies that are seeking capital.
The TSX is in a constant battle for such marquee listings with other global exchanges such as London.
Intergeo, another base metals miner, is also looking to bring an IPO to the Toronto market soon.
Intergeo, owned by Russian billionaire Mikhail Prokhorov, is developing copper and nickel mining assets in Siberia.
Mr. Friedland is based in Singapore, and has a reputation for unearthing huge mineral discoveries.
He sold the Voisey’s Bay nickel deposit in Newfoundland to Inco for $3.1-billion in the 1990s, then developed the giant Oyu Tolgoi project in Mongolia, which will be one of the world’s biggest copper and gold mines when up and running.
That reputation is likely to draw investors, as is the appeal of Ivanplats’s flagship project. The company has a trio of deposits in Africa, including the big copper Kamoa find in the Democratic Republic of the Congo.
According to the offering documents, the Kamoa project is “amongst the largest high-grade, and largest undeveloped, copper deposits in the world.”
However, the offering comes after a rough year for mining stocks, especially ones with risk attached, amid fears that a slowing global economy would hurt commodity prices.
The biggest question mark over the market is likely the direction of copper prices. While they have been bouncing back, it is not clear how sustainable that is.
China, the biggest consumer of copper, is feeling the pressure of economic troubles in Europe, the country’s biggest market for exports. The U.S. economy is still struggling to bounce back.
It adds up to a murky picture for copper, which is viewed as the commodity most sensitive to economic fluctuations.
In recent days, however, the window for sellers of metals shares shows signs of reopening. In the past few months, there has been more optimism about mining companies and metals, and copper prices rose to a four-month high Tuesday.
Ivanplats has the advantage of low costs to produce copper. The Kamoa project, the high-grade copper deposit that Ivanplats plans to develop as a near-term objective, is expected to have average cash costs of about $1.19 a pound, according to the IPO documents. That’s about one-third of the copper price of $3.69 a pound in New York on Tuesday.
With files from reporter Pav Jordan in Toronto.