Royalty and streaming company Triple Flag Precious Metals Corp. is looking to raise around $350-million in what would be the biggest mining initial public offering in Canada in more than two years, according to sources.
Toronto-based Triple Flag was founded in 2016 by former Barrick Gold Corp. chief financial officer Shaun Usmar, and it has the financial backing of New York-based hedge fund giant Elliott Management Corp.
Privately-held Triple Flag, which last week filed paperwork for a public offering on the Toronto Stock Exchange, is targeting a valuation of $1.5-billion, said sources familiar with the offering, who were granted anonymity because they weren’t authorized to speak publicly on the matter.
The company intends to use proceeds from the offering to fund the purchase of future royalty and streams, repay debt and fund a recent $145-million gold streaming deal with South African miner Royal Bafokeng Platinum.
Royalty and streaming companies provide up-front financing to mining companies in exchange for either a percentage of future revenue or a share of the actual metal production.
Triple Flag is attempting an IPO at a difficult time both for mining financing and the overall IPO market. This month alone, two high-profile Canadian IPOs were called off at the eleventh hour.
On Nov. 5, GFL Environmental Inc. abandoned plans to raise $2.4-billion in what would have been one of the biggest IPOs in Canadian history, after failing to get sufficient support from institutional investors. It has decided instead to remain private.
A few days later, Continuum Residential Real Estate Investment Trust cancelled its planned $300-million offering to public investors, opting instead to sell itself to Starlight Investments.
If the Triple Flag IPO goes ahead, it will reopen a market for mining financing that has been more or less closed since late 2017. The last IPO of note in the industry was copper company Nexa Resources SA, which raised US$570-million in a dual listing in Toronto and New York in October, 2017.
Triple Flag has a portfolio of 37 royalties and streams across producing mines, construction-stage projects and early-stage development assets. Among its most valuable holdings are royalties on Alamos Gold Inc.'s Young-Davidson gold mine in Ontario and on Kirkland Lakes Gold Ltd.'s high-grade Fosterville gold mine in Australia, one of the industry’s best-performing assets.
Over the past decade, royalty and streaming companies have generally outperformed pure-play miners. Incurring few of the traditional costs of mining, royalty and streamers are generally seen as a lower risk method of investing in the sector.
Still, Triple Flag is posed to enter the public markets amid an increasingly crowded field that also includes well-established players such as Franco-Nevada Corp. and Wheaton Precious Metals Corp., as well as newer companies including Osisko Gold Royalties and Maverix Metals Inc., founded in 2014 and 2016, respectively.
Triple Flag’s biggest shareholder, Elliott Management, isn’t planning on selling its stake in the IPO. Known for its activist investment approach, Elliott recently successfully pushed for a wholesale strategy change at AT&T after disclosing a US$3.2-billion stake in the U.S.-based telecommunications company. The firm’s roughly US$38.2-billion under management also includes book seller Barnes & Noble Inc., which it acquired for US$475-million in June.
Mr. Usmar, Triple Flag’s chief executive officer and a native of South Africa, spent about 18 months at Barrick, the world’s second-biggest gold company. Previously, he worked as a long-time executive at Xstrata PLC, one of world’s biggest diversified miners, which bought Canadian nickel company Falconbridge Ltd. for $18.8-billion in 2006. Triple Flag’s current board members include Mick Davis, former CEO of Xstrata.
The Triple Flags offering is being led by Merrill Lynch Canada Inc., Scotia Capital Inc. and CIBC World Markets Inc. BMO Nesbitt Burns Inc., National Bank Financials, RBC Dominion Securities Inc. and TD Securities Inc. are also on the syndicate.
Both Triple Flag and Elliott Management declined comment.
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Niall McGee