Triple Flag Precious Metals Corp. has cancelled its plans to go public, citing difficult market conditions, in what would have been the biggest initial public offering in the Canadian mining sector in more than two years.
The Toronto-based precious metals royalty and streaming company had planned to raise as much as $360-million from public investors, and was targeting a valuation of about $1.5-billion.
Triple Flag was founded in 2016 by former Barrick Gold Corp. chief financial officer Shaun Usmar. Its biggest shareholder is giant New York-based hedge fund company Elliott Management Corp.
Despite the mostly hostile market for raising capital in the mining industry, Triple Flag was seen as a likely candidate to succeed, given that streaming and royalty companies have performed much better than traditional miners over the past five years.
Unlike producers, royalty and streaming companies don’t incur many of the traditional costs or risks of mining. They instead provide capital to companies in exchange for payments tied to future production, or a share of the eventual metals output.
Sources close to Triple Flag said that major international mining funds were willing to buy shares in the company, but at a lower price than it hoped.
Triple Flag spent two weeks marketing the IPO in Canada, the United States and Britain.
Some investors in the U.S. expressed reluctance to participate in a new offering, one source said, given that new IPOs have generally not done well this year in the U.S.
Sources were granted confidentiality because they were not authorized to speak publicly on the matter.
Since Triple Flag wasn’t desperate to raise outside capital, it could afford to pull the deal and wait for a new window for a public offering to open up later.
Elliott Management, which has put about $1-billion into the company so far, is willing to keep funding Triple Flag, a source said.
Elliott Management didn’t respond to a request for comment.
Successful IPOs are also often the result of good timing, as much as a solid underlying business, and Triple Flag’s timing wasn’t ideal.
After a rally earlier in the year that saw gold bullion climb to US$1,550 an ounce, the precious metal has trended downward in recent months, dampening the appeal of a company so leveraged to the metal.
Marketing an IPO in December can also be tricky. Traditionally, fund managers are reluctant to take on new positions close to year end, so as not to jeopardize annual returns.
In addition, Triple Flag was attempting a public offering at a difficult time for the overall Canadian IPO market. Last month, two high-profile domestic IPOs were called off at the 11th hour. GFL Environmental Inc. abandoned plans to raise $2.4-billion, and Continuum Residential Real Estate Investment Trust cancelled its $300-million offering, opting instead to sell itself to Starlight Investments.
Bankers, who are paid only on the successful completion of a deal, missed out on a potentially fat pay day. Had the Triple Flag transaction succeeded, bankers would have earned a 5-per-cent commission worth $18-million.
Merrill Lynch Canada Inc., Scotia Capital Inc. and CIBC World Markets Inc. were the lead bankers on the file. BMO Nesbitt Burns Inc., National Bank Financials, RBC Dominion Securities Inc. and TD Securities Inc. were also on the syndicate.
The last IPO of note in the mining industry was copper company Nexa Resources SA, which raised US$570-million in a dual listing in Toronto and New York in October, 2017.
While large mining financings have been a tough sell this year in Canada, there have been some pockets of strength among the juniors.
Earlier this month, Uranium Royalty Corp. raised $30-million in an IPO on the TSX Venture Exchange. And earlier this week, junior gold company Teranga Gold Corp. had little trouble raising $140-million in a secondary stock offering, in a matter of hours, after it announced a well-received acquisition.
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Niall McGee