Ivanplats Ltd. (IVP)’s C$300.8 million ($301.8 million) initial public offering last month will be a “litmus test” for whether Canada is ready for a revival in mining-company IPOs, PricewaterhouseCoopers LLP said.
Four mining companies sold shares for the first time on the TSX Venture Exchange in the third quarter, down from 14 a year earlier, PwC said today in a report. Mining IPOs on the exchange in the first nine months of 2012 fell to 25 from 34.
“There are some very significant IPOs in the pipeline that could revive the total IPO market and turn around the year, but it will require the resolution of some thorny economic issues beyond our borders” Dean Braunsteiner, a PwC partner in Toronto, said in the report.
Ivanplats, founded by billionaire Robert Friedland, was the largest Canadian mining IPO since Tahoe Resources Inc. (THO) raised C$348 million in 2010.
There may also be a rebound in Canadian mining merger and acquisitions in coming months as so-called junior mining companies face pressure from “impatient” shareholders seeking a return on their investment, PwC also said. “Senior” miners are approaching some of their smaller rivals and offering “significantly” less than what they were worth a year ago, PwC said.
“Many junior miners, who are holding their breath, hoping to be acquired by a senior mining company, will either have to pursue other growth and financing options or be willing to accept much lower valuations,” PwC said.
Junior Canadian miners with operations in Africa may draw bids from Chinese suitors interested in “unrestricted access to supply,” PwC said.
“Chinese buyers typically have much higher risk tolerance for the financial and political risk that infiltrates many African regions,” it said.
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