Robert Friedland returns with Ivanplats IPO
Peter Koven | Sep 11, 2012 4:35 PM ET | Last Updated: Sep 11, 2012 7:23 PM ET
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Robert Friedland is back.
The legendary mining promoter has launched a long-awaited initial public offering for Ivanplats Ltd., which controls massive mineral deposits in South Africa and the Democratic Republic of Congo (DRC). The IPO is expected to raise hundreds of millions of dollars, sources said, and could be the largest on the Toronto Stock Exchange this year.
The single largest Canadian IPO of the year is Sunshine Oilsands Ltd. (at $575-million), but that offering was in Hong Kong. The largest TSX IPO was Argent Energy Trust, which raised $244-million. Ivanplats will likely be bigger.
Previous media reports suggested Mr. Friedland wanted to raise as much as $1-billion with this deal. However, sources said expectations are much lower than that, given turbulent market conditions and high risk aversion among investors right now.
The offering marks a return to the TSX for Mr. Friedland, who disappeared five months ago when he resigned from Ivanhoe Mines Ltd. (later re-named Turquoise Hill Resources Ltd.). He left Ivanhoe after Rio Tinto Ltd. took majority control of the company and its flagship project, the Oyu Tolgoi mine in Mongolia.
Ivanplats has existed as a private entity since 1994, and sources said it has many high-profile investors. The company has three key assets: the Platreef platinum deposit in South Africa, and the Kamoa and Kipushi projects in the DRC.
Platreef has received a major investment from the Japanese conglomerate Itochu Corp., which paid US$290-million for a 10% stake.
Ivanplats sees Kamoa as the flagship project. It has 9.2 million tonnes of copper in measured and indicated resources, and another 12.5 million tonnes of inferred resources, according to the preliminary prospectus for the IPO.
On paper, the US$2-billion project is one of the most attractive copper assets in the world. However, it is in the DRC, an extremely high-risk jurisdiction, and it remains to be seen if investors will pay up for exposure to that part of the world.
Kamoa is located near the Kolwezi project, which the Congolese government expropriated from First Quantum Minerals Ltd. in 2010 in a highly irregular transaction. The Ivanplats underwriters will be targeting many First Quantum shareholders for this IPO, and those investors may not be keen to relive the Kolwezi debacle.
Kipushi, the third asset, is a past-producing mine that shut down in 1993, but still contains a large zinc deposit. The project is a joint venture between Ivanplats and Gécamines, the Congo’s state-owned mining company.
Ivanplats needs to raise capital to keep the projects moving forward, with feasibility studies to be done on Kamoa and Kipushi. The company had almost US$85-million of cash and cash equivalents as of June 30th, according to the prospectus.
The Ivanplats IPO took a long time to come to market, partly because market conditions for junior mining companies have been so bad. They remain very weak, and the entire industry will be watching the demand for this IPO closely. Investment bankers have said there are many other mining IPOs in the pipeline, and they may come to market more quickly if Ivanplats does well.
The underwriters on the Ivanplats deal are BMO Nesbitt Burns Inc., Morgan Stanley Canada Ltd., Macquarie Capital Markets Ltd., and RBC Dominion Securities Inc.
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