IM April 2022 – Gold financings quadruple, boost funding to 1-year high

Introduction

Funds raised in March 2022 increased 105% month over month to US$2.15 billion, the highest amount raised in 12 months. The number of deals increased 38% to 216, from 157 recorded in February. Significant financings — transactions valued at US$2 million or more — accounted for 97% of the funds raised. The average offering amount increased to US$10 million, from US$6.7 million in February.

March's percentage increase of 105% was the largest in 31 months, and the funding total was the largest in 12 months, buoyed by quadrupling and doubling of gold and specialty metals financings, respectively. The year-to-date fundraising was nevertheless lower than the same period in 2021. The US$4.07 billion raised in the first quarter was 45% lower than the US$7.35 billion raised in the year-ago period. The number of offerings declined to 480 from 658.

All financing instruments posted considerable growth. Equity offerings doubled in March, accounting for nearly 80% of the total and fueling the increase over February. Funds raised from IPOs accounted for 12% after a 50% increase month over month to US$268 million, while debt and convertible debt instruments accounted for 8% of the total.

Funds raised on the Toronto Stock Exchange rose 235% and accounted for nearly half the March total with US$1.03 billion. Funds raised on the Australian Securities Exchange dipped 10% to US$449 million, while funding on New York Stock Exchange surged to US$217 million, from US$2 million in February. Funds raised on the Other Exchanges group grew sevenfold, boosted by the US$233 million raised in the IPO of Al Masane Al Kobra Mining Co. on the Saudi Stock Exchange.

Gold financings hit record high

Gold fundraisings increased 296% to US$1.22 billion, the highest monthly total since we began tallying significant and smaller financings in 2014. The number of fundraisings rose 61% to 122, and seven transactions valued at over US$50 million accounted for more than half the month's total. The number of significant financings for gold more than doubled to 67, from 32 in February. Despite the large increase in March, the year-to-date total for gold of US$1.82 billion was 14% lower than the US$2.11 billion recorded in the year-ago period.

Almost 95% of funds raised for gold came from equity offerings. Funding on the TSX rose 248% to US$693 million, accounting for 57% of March fundraising. While lower compared with the TSX, funds raised on the ASX and NYSE increased to total about US$200 million each.

March's largest gold financing and the second-largest overall was the US$139 million domestic market offering by Hycroft Mining Holding Corp. In mid-March, the company entered into a sales agreement with B. Riley Securities for the offer and sale of its common shares from time to time for up to US$500 million. Hycroft will use the proceeds for various purposes, including exploration and development. It recently reported an updated mineral resource estimate at the wholly owned namesake gold-silver mine in Nevada, which began production in 2019.

The second-largest gold raising was a nonbrokered follow-on offering by Osisko Development Corp. valued at C$147 million (US$118 million). The company will use the proceeds to advance development of its mineral assets. Osisko also closed two follow-on offerings earlier in the month valued at a total of C$146 million (US$115 million).

Copper financings up fivefold, but nickel, zinc weighed down base/other metals

Funds raised for base/other metals continued to trend higher, after a recent low in December 2021, increasing 6% month over month in March to US$622 million, while the number of financings increased 22% to 71, from 58 in the previous month.

Equity transactions accounted for 50% of the funds raised, and IPOs followed with 38%, buoyed by the US$232 million in proceeds from the IPO of Saudi Arabia-based Al Masane Al Kobra Mining Co. The TSX group and the Other Exchanges group were virtually tied in funds raised at US$247 million, although the latter was driven mainly by the Al Masane IPO. Funds raised on the ASX dropped 81% month over month to US$59 million as the number of financings halved amid a lack of larger fundraisings.

Funds raised for copper increased fivefold to US$431 million, accounting for 69% of the total raised for base/other metals, after dropping to a recent low in February. Silver was a distant second but had a 358% increase to US$110 million. Funds raised for nickel dropped 69% and for zinc dropped 96%, while funds for cobalt increased to US$3 million, from US$200,000 in February.

The largest base/other metals financing and the largest overall was the US$233 million IPO by Al Masane, which will use the proceeds for exploration and development of its projects in Saudi Arabia. The IPO was part of the government's larger strategy of diversifying its oil-driven economy by revamping sectors such as mining to attract investors. Al Masane owns an operating mine that produces copper, zinc, gold and silver.

The second-largest base/other metals financing was the follow-on offering by Canada-based Filo Mining Corp., which raised C$100 million (US$79 million). The company will use the proceeds for a drill program and reserves development at its namesake copper-gold project in Argentina.

Lithium financing triples

Funds raised for specialty metals continued to recover in March after dipping to a recent low in January. Financings increased 103% month over month to US$312 million, despite the number of financings remaining flat at 23. The number of significant financings rose to 16, from nine in the previous month, valued at a total of US$308 million, with the three largest financings accounting for almost two-thirds. Equity transactions remained the key driver with a 79% share, although debt transactions increased to US$58 million from historically lower figures in the previous months.

ASX-listed companies led the exchanges for a second consecutive month, increasing 88% to US$189 million. Raisings on the TSX group tripled to US$89 million, although year-to-date, ASX-listed companies remained ahead with US$302 million compared with US$158 million for the TSX group.

Fundraisings for lithium dominated the month with a 275% increase to US$192 million, accounting for 62% of the specialty commodities funds raised. Funding for diamonds increased substantially to US$60 million, from almost zero in the past three months. Fundraisings for graphite were US$19 million and for rare earth elements were US$8 million.

The largest fundraising for specialty commodities was the US$131 million follow-on offering by ASX-listed, U.S.-based Piedmont Lithium Inc. aimed at funding the restart of operations at its 25%-owned North American Lithium mine (Sayona Mining Ltd. 75%) in Quebec, along with feasibility studies in Ghana and other exploration and permitting projects. The second-largest financing was the US$50 million debt transaction by Toronto-based Mountain Province Diamonds Inc. with an entity owned by Dermot Desmond.

^{This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.}