Figures from the worlds top
mining exchanges have shown tentative signs of a
revival in the fortunes of mining stocks, but the patchy
presence of newly-listed companies suggests that it remains
difficult for miners to float.
Initial public offerings (IPOs) are a key bellwether of
investor sentiment towards mining and last year was one of the
worst in almost a decade for new listings in the industry, with
the number of floats plunging to record lows.
In the UK, the
London Stock Exchange (LSE) is still waiting to see any
miners float on either its main board or AIM this year, having
floated only five in 2013.
2014 has seen no IPOs of mining companies in London,
yet, Luca Broglio, international associate, equity and
capital markets, at the LSE told IM.
Despite the persistent weakness in the IPO market, Broglio
suggested that the capital raising environment for its 190 or
so listed miners seems to be improving.
Our mining companies have raised about $460m in
further offerings [this year], he said. This represents
more than one tenth of the LSEs calculated total funds
raised for miners across the world in the three months to 31
March, including IPOs.
In terms of global capital raising activity, in Q1
2014, miners raised about $4.4bn of which only about 15%
was via IPOs in three deals, he said.
Broglio also pointed out that, in London, which is
characterised by the depth rather than breadth of its liquidity
platform for miners, mining stocks are outstripping the wider
market while keeping pace with the global industry.
In terms of the Q1 2014 [index] performance, the FTSE
350 Mining Index has over performed the FTSE 100 consistently
during the period, while it has been broadly in line with the
aggregate performance of global miners around the world,
Investors venture back to TSX
On the Toronto Stock Exchange (TSX) and Venture Exchange
(TSX-V), which together house more than 1,600 listed miners and
make up the worlds largest market for mining stocks, IPOs
are making a more convincing recovery.
The TSXs mining indexes saw 14 new listings in the
first three months of this year ten of which floated on
the TSX-V and raised just over C$4bn ($3.7bn*) in IPOs
and further offerings.
While not staggering by the TSXs historical standards
in both 2010 and 2011, the combined indexes saw more
than 200 listings this number represents a welcome
turnaround from the first quarter of 2013, when the Toronto
market did not record a single mining IPO the first time
in a decade that had happened, according to a report by
Certainly, it seems (...)
that the market in the first quarter was a bit firmer than it
has been of late, Graham Dallas, head of business
development EMEA at the TSX told IM.
However, of the C$4bn raised on both markets, C$3.5bn came
via the TSX with just $0.5bn raised on the TSX-V, indicating
that investors are still wary of junior stocks.
ASX poised for recovery
With around 780 listed mining companies, the Australian
Securities Exchange (ASX) ranks second in the world for traded
mining stocks and is also struggling to make a recovery.
Last year, mining and metals companies accounted for just 14
of the 85 new listings in Australia and in Q1 2014, the
ASX saw just two mining related businesses float on the
stock market coal developer U&D Coal Ltd and a
Valence Industries Ltd.
ASX manager for listings business development, James
Posnett, shrugged off this fragile start to the year by
suggesting that the lack of IPOs was a symptom of the ongoing
tepidity of investor confidence in mining equities
I understand both London and Toronto are still feeling
the effects of reduced resources prices, Posnett told
He also dismissed suggestions that a number of
ASX-registered miners are looking to dual-list on the LSE owing
to the present difficulty of raising capital from Asia-Pacific
According to the ASXs Upcoming floats and
listings board, five mining companies are due to complete
IPOs on the market within the next month. However, most of
these are focused on gold, rather than industrial metals and
IPO market leaves mining behind
Recent figures published by SNL Metals&Mining in its
first quarter State of the Market report suggest
that the dearth of mining company IPOs is a black spot in what
is an otherwise healthy business for stock exchanges.
The number of IPOs across all industries globally doubled
year-on-year in the first quarter of 2014, to over $40bn,
SNLs analysis found.
The IPO revival in the general market is a welcome
sign of increased risk taking and of financial markets again
functioning efficiently after almost seven years of
crisis, the SNL report stated.
In terms of overall fundraising, SNL found that mining is
beginning to regain the attention of financiers, although
investors continue to avoid backing exploration companies.
According to the report, $7bn was raised globally for the
mining sector in the first three months of 2014, of which only
$1.6bn was for juniors.
The combination of investment banks falling out of
love with commodities and IPOs not serving the smaller
companies is worrying for junior exploration and mining
companies, the SNL report said. The global economy
might have turned the financial corner, but this is not yet
true for the mining sector.
Speaking to IM earlier this year, Investec
mining analyst Hunter Hillcoat said that despite the apparent
appetite for new company listings generally, he did not foresee
the IPO market catching fire for miners in
The wider IPO market is doing very well, but none of
it is mining, Hillcoat said. You could probably do
a gold IPO in Australia, but its pretty tough for most
other minerals and metals, he added.
*Conversion made May 2014