Frontier Rare Earths Falls in Stock Trading Debut After $59 Million IPO

Frontier Rare Earths Ltd., a developer of a South African deposit of metals used in computers and car batteries, fell on its first day of trading in Canada after completing a C$60 million ($59 million) initial public offering.

Shares of the Luxembourg-based company declined 8.2 percent to C$3.12 by the 4 p.m. close of trading on the Toronto Stock Exchange, from its IPO price of C$3.40.

Frontier Rare Earths sold 17.65 million units, consisting of one share and half a warrant, according to a statement today. The sale, which raised 50 percent more than initially planned, represents a 19.8 percent stake in the company, based on 89.1 million shares outstanding.

The company aims to become one of the leading producers of rare-earth metals outside of China and one of the first new producers of the elements after Lynas Corp. and Molycorp Inc. Frontier is developing the Zandkopsdrift deposit in South Africa’s Northern Cape Province, the company said in a filing with Canadian regulators.

The rare earths, a group of 17 metals including neodymium, lanthanum, cerium and europium, have industrial uses such as petroleum refining, fiber-optic transmission, and military radar and missile-guidance systems. China dominates the market because it’s been able to produce the elements more cheaply and with fewer environmental restrictions than its competitors.

Molycorp has more than doubled since its July 29 debut on the New York Stock Exchange, after selling shares for $14 each in its $394 million IPO. Shares of Sydney, Australia-based Lynas Corp. have more than doubled in the past 12 months.

CIBC World Markets led a group of banks including Canaccord Genuity, Cormark Securities Inc., Byron Securities Ltd. and National Bank Financial for the sale. Bankers have the option to sell another 15 percent of the offering.

Companies have sold $5.29 billion in IPOs in Canada this year, the highest amount since 2006, according to Bloomberg data.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net; or David Scheer at dscheer@bloomberg.net