Mining Companies Drive Record Share Sales

Mining companies are issuing shares at the fastest rate in ten years as investors seek opportunities in rising gold prices and the growing demand for critical minerals, reported Mining.com. 

By late October, mining and metals firms across North America had raised about US$2.9 billion through 185 equity deals, marking the strongest month for public share offerings in the sector since November 2013.

Gold and silver miners represented roughly a third of those deals. Despite recent declines in precious metal prices, investors continue to show strong interest. “I cannot even think of a deal that’s struggled for the last while,” said Daniel Nowlan, Vice-Chairman and Managing Director of Equity Capital Markets at National Bank Capital Markets. “Almost everything’s been oversubscribed – many deals have been upsized, so the market’s been very strong.”

Nowlan added that enthusiasm is also being fueled by investor demand for critical minerals and copper, supported by US government initiatives and near-record copper prices. He expects the momentum in mining stock offerings to continue “for a while,” even as gold and silver prices have softened since late October.

The Bank of Montreal (BMO) has led as the most active adviser to mining companies issuing shares this month. Peter Miller, Head of Equity Capital Markets, BMO, expects activity to remain high through November, noting that metals prices do not need to be “stratospheric” for miners to attract investors , only “buoyant.” He also highlighted that the current boom is driven largely by smaller, junior miners rather than a few large companies dominating the space.

Among the largest recent transactions, NexGen Energy Ltd. completed a US$287 million bought deal alongside an expanded US$396 million offering in Sydney. In the precious metals space, Denver-based Hycroft Mining Holding Corp. raised US$171.4 million in October’s biggest gold and silver financing.

For investors who have long followed the sector, the renewed flow of capital marks a turning point. “We have not seen that much capital come into the space in a long time,” said John Ciampaglia, CEO of Sprott Asset Management. “I think that is  really bullish and a healthy signal and a vote of confidence from investors.”

Analysts expect the wave of equity offerings to continue. “You are going to see a lot of these companies come to market, IPO, SPACs, raise equity,” said Subash Chandra, Analyst at Benchmark Co. “They are all going to be in this competitive froth to get to market first.”