IM March 2022 – Financings recover slightly after record low

After starting the year with a 58% month-over-month decline in January, funds raised in February rebounded 21% to total slightly above US$1 billion. The number of deals increased 47% to 157 from a record low of 107 in January. Significant financings — transactions valued at US$2 million or more — accounted for 94% of the funds raised. While the increase of 21% was lower than the 47% increase in the number of financings, the average offering amount slightly declined to US$6.7 million.

February's percentage increase in funds raised was enough to buoy the totals above the US$1 billion mark but was lower than the 31% month-over-month growth in the year-ago period. The trend of fundings year-to-date has been weaker than in 2021, with the monthly total 49% less year over year and the financings year-to-date totaling US$1.92 billion, 48% less than US$3.66 billion in the same period in 2021. The number of offerings also declined to 264 from 419 in the year-ago period.

The bulk of the financings came from equity offerings, accounting for 80% of the total, which fueled the month's increase by doubling in February. Funds raised from IPOs accounted for 17% and also boosted the monthly total with fivefold growth. Financings from debt accounted for only 3% of the total.

After four months, funds raised by companies listed on the Australia Securities Exchange, or ASX, once again dominated with 47% of the total, increasing 261% to US$497.2 million from US$137.7 million in January. Funds raised on the Toronto Stock Exchange, or TSX, ranked second, halving month over month to US$306.9 million. After four months of no records, funds raised on Asian exchanges accounted for 16%, or US$167 million, solely attributed to one company's financing that is also the largest in the base and other commodity group category. Funds raised on the London Stock Exchange, or LSE, accounted for barely 1% of the total, after a 26% drop month over month.

Gold financings barely recovered from record low

Despite the number of transactions for gold funding bumping up to 76 from 58, the total raised for gold was relatively flat after a two-year low in January, with a marginal 3% increase to US$307.2 million. February gold financings were 58% less than the US$730.5 million in February 2021. Contributing to the almost insignificant change month over month was the opposite trend of smaller versus significant financings. Smaller gold financings, with values less than US$2 million, almost doubled to US$31.1 million, while significant financings fell 2% to US$276.1 million. This lackluster performance gave gold a 29% share of the total, compared with 35% in the year-ago period. The year-to-date total for gold is US$605.3 million, just over half of US$1.08 billion in the year-ago period.

Gold fundraising on the TSX helped buoy the precious metal's total by more than doubling month over month to US$199.1 million. ASX gold funding shrank 15% to US$86.9 million, marking the first time in six months that gold dipped below US$100 million on the exchange.

February's largest gold financing and the fourth-largest overall was the C$76.1 million (US$60 million) private placement of Sabina Gold & Silver Corp.'s common shares. This was the first tranche of a US$95 million equity private placement to fund construction and development of the Goose mine in the company's Back River gold project in Nunavut.

The second-largest gold raising was the completion of a bought-deal private placement by TSX-listed Amex Exploration Inc. amounting to C$43.1 million (US$39.1 million). The company will use the funds to continue exploration and resource building in the Perron deposit of its Normetal project in Quebec.

Base/other metals financing up, number of deals doubles month over month

After almost doubling month over month in January, financings for base and other metals continued their upward trend with a 15% increase in February to US$589.2 million, together with a jump in the number of financings to 58 from 28 in January. Smaller and significant financings for the commodity category both increased, by 183% and 12%, respectively.

After a considerable increase in January, funds raised for copper dropped 81% to US$83.2 million in February, shrinking the metal's share to just 14% of the base/other metals total. This was copper's lowest total since October 2020. Conversely, financings for nickel skyrocketed sevenfold to US$281 million, an 11-month high. Funds raised for zinc grew by an even larger percentage to US$185.2 million from US$3.9 million. Funds raised for silver increased 75% to US$23.9 million, while financing for cobalt plunged to US$200,000 from US$8.4 million in January.

More than half the funds raised for base/other metals was by ASX-listed companies, with the exchange's total surging to US$309.7 million from US$22.7 million in January. Funds raised on the Asian exchanges recorded a sizable US$167 million, bringing the group's share to 28% — second to the ASX. Financings by TSX-TSXV listed companies fell to US$78.4 million after the recorded US$473.2 million raised in January.

The largest base/other metals financing and the largest overall was China-based Jinhui Mining Co. Ltd.'s IPO, amounting to CN¥1.06 billion (US$167 million). The company listed on the Shanghai Stock Exchange shortly after and intends to use the funds for exploration and an upgrade of its lead-zinc mines.

ASX-listed Nickel Mines Ltd. had both the second- and third-largest base/other metals financings, and also the second- and third-largest overall. Both are part of a US$225 million capital-raising effort announced Feb. 9, of which A$148.1 million (US$107.3 million) came from an institutional placement, and A$148.1 million (US$105.8 million) came from a private placement with Shanghai Decent Investment (Group) Co. Ltd. Nickel Mines will use most of the proceeds to acquire a significant equity interest in the Oracle nickel project in Indonesia. The company completed a 10% acquisition of the project Feb. 18.

Specialty commodities financings pulled monthly total to recovery

After dipping to a nearly two-year low in January, financings for specialty commodities recorded the largest percentage increase among the commodity groups, almost tripling to US$154.2 million from the US$55 million raised in January. The significant rise was due to several fundraisings above US$50 million by a single company, as the number of offerings remained flat at 23 after 21 in January.

ASX-listed companies posted the most significant increase, to US$100.6 million from only US$12.3 million in January. Although TSX/TSXV- and LSE-listed companies recorded month-over-month declines to US$29.4 million and US$1.3 million, respectively, the ASX increase was sufficient to pull the totals up — for both the commodity group and the overall monthly total.

The top specialty commodity fundraisings were mostly dedicated to graphite, resulting in graphite financings accounting for 63%, or US$97.6 million, of the specialty commodity total — well above January's US$27.9 million. This was the highest monthly total for graphite since December 2020, when funds raised for the commodity totaled US$100.9 million. Graphite is commonly used in anodes for lithium-ion batteries. Lithium accounted for 33%, or US$51.2 million, of the total, while other metals such as lanthanides, tungsten, diamonds and vanadium accounted for the remaining nominal shares.

The top two specialty commodity fundraisings were by Victoria-based Syrah Resources Ltd. The company raised A$68.1 million (US$48.6 million) in a placement and A$57 million (US$41.4 million) in entitlement offers. Syrah will use the funds for expansion of its Vidalia plant in Louisiana and its Balama mine in Mozambique, both of which are dedicated to graphite.

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