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Sparks fly as an employee performs a quality check on a steel slab at the Stelco Holdings Inc. plant in Nanticoke, Ont. on Nov. 14, 2017. This year, the 107-year-old company completed the first initial public offering of a North American steelmaker in seven years.

Cole Burston/Bloomberg

While 2017 saw a revival of initial public offerings in Canadian mining and metals, investment bankers aren't optimistic that IPO activity will be as brisk in 2018.

"It doesn't feel like there is a very long list of companies waiting to IPO," said Michael Faralla, head of global mining with TD Securities Inc.

Mr. Faralla cited the current lukewarm market for secondary mining-equity issues, which went off the boil in the second half of the year. The secondary market acts as a leading indicator for demand for shares in new public companies.

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"There were fewer deals and I think they struggled," he added.

After being dormant in 2016, Canadian mining initial public offerings sprang back to life in 2017, with about $830-million raised, according to Thomson Reuters data, the strongest market since 2010, when mining IPOs raised $1.2-billion.

In October, Luxembourg-based Nexa Resources SA raised $570-million (U.S.) in a dual listing in Toronto and New York. It was the third-biggest mining IPO ever on the Toronto Stock Exchange. (The deal was not included in Thomson Reuters calculation, as Nexa isn't domiciled in Canada.) Nexa, the world's fourth-largest zinc producer, had previously been held within Votorantim SA, a privately owned Brazilian industrial conglomerate.

Jason Neal, global co-head of metals and mining with BMO Nesbitt Burns, which co-led the Nexa offering, says while large mining IPOs in the vein of Nexa are unlikely in 2018, there is "growing confidence" in the base-metals sector and the market "should be supportive" of more new issues.

A number of new base-metals companies came to market this past year, as the price of copper and zinc hit multiyear highs. Ero Copper Corp., which has a copper mine in Brazil, raised $127-million (Canadian) in October, and Titan Mining Corp., whose chief asset is a zinc mine in New York state, raised $50-million the same month.

One other niche area of excitement in the IPO market in 2017 was cobalt, which spiked in price owing to demand for electric cars, which require batteries manufactured with cobalt. Cobalt 27 Capital Corp., a pure play on physical cobalt, raised $200-million in a June offering on the TSX Venture Exchange.

The gold sector, however, wasn't nearly as frisky in 2017. With bullion prices largely stagnant over the past year, the gold IPO market was quiet.

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Superior Gold Inc. was among the few to tap the new issue market, raising $33-million in February. BMO's Mr. Neal isn't expecting an uptick in gold IPOs in 2018, partly because there aren't a lot of viable candidates in the pipeline. Over the past few years, a number of new gold companies had been born with the objective of chasing asset sales from the majors. For example, Leagold Mining Corporation, came to market in 2016 in a reverse takeover and acquired Goldcorp Inc.'s Los Filos mine for $350-million (U.S.) in 2017.

But with asset sales from the majors largely done, that leaves little new fodder for IPOs, said Mr. Neal.

The second-largest IPO in mining and metals in 2017 was steel producer Stelco Holdings Inc., which raised $230-million (Canadian) in November after emerging from creditor protection.

Could we see more steel IPOs over the next few years?

"The elephant in the room is Algoma," said Egizio Bianchini, global co-head of metals and mining with BMO.

Essar Steel Algoma Inc. is currently in creditor protection, and one possible outcome of that process is an eventual IPO of the next iteration of Algoma once it emerges from the court process, Mr. Bianchini said.

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BMO, Scotia Capital Inc. and Goldman Sachs & Co. were the top three advisers for Canadian mining IPOs in 2017, according to Thomson Reuters.

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