Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
There is light at the end of the ramp. There have been several financings in the hundreds-of-million-dollar range since the beginning of the year, and that leaves me hoping the worst is over for the mining community.
In early February, Osisko Mining of Montreal closed a bought deal worth C$350 million. That money is earmarked for completion of the Malartic gold project in Quebec.
Then Kinross Gold of Toronto completed a US$415-million public equity offering. The money will be used to pay down debt incurred with recent acquisitions.
Uranium producer Cameco of Saskatoon completed a bought deal that raised C$460 million. The money will strengthen the company treasury as Cameco looks for opportunities in today’s economic environment.
Vancouver’s Gold Wheaton has completed a C$115-million equity financing to pay for its purchase of 25% of the gold produced by First Uranium from its tailings recovery operation in South Africa.
Great Basin Gold of Vancouver is raising C$130 million to further the development of the Burnstone gold project in South Africa.
Finally, IamGold of Toronto announced the terms of a C$300-million equity financing on March 10. The company will use the net proceeds to develop the Essakane gold mine in Burkina Faso.
These are the biggest deals announced since the beginning of this year, and they make an impressive list, being just shy of C$1.9 billion in total. Doubtless the fact that gold is the sought after metal in most of these deals foretells a strengthening of the price. Reports that I have recently read put the price as high as US$2,000 an ounce by the end of 2010. We will have to wait and see.
While the price of copper has not reached the heady US$4.00-a-pound range of last summer, analysts note that demand is beginning to rise for this metal, too. We can thank the Chinese for that, they say.
With two reasons to be optimistic, Canadian miners have also made many smaller, but still successful, offerings. Here is a short list.
Farallon Resources, $25 million private placement. Farallon is exploring the G-9 zinc-copper-silver-gold-lead project in Mexico.
First Majestic Silver, $21 million. First Majestic is developing the La Encantada Silver mine and mill in Mexico.
International Tower Hill Mines, $10 million bought deal. Proceeds will be used on the Livengood gold project in Alaska.
Jaguar Mining, $86 million public offering. Jaguar plans to use the money to develop its Caeté gold mill project in Brazil.
Lake Shore Gold, $61 million equity and flow-through offering. Lake Shore will use the funds for the underground rehabilitation and development at the Bell Creek gold mine near Timmins and for exploration projects in Ontario and Quebec.
Queenston Mining, $18 million private placement. Queenston hopes to bring at least one new gold mine into production in Ontario.
Rubicon Minerals, $40 million bought deal. The money will be spent on exploration and development of the company’s Phoenix gold property near Red Lake, ON.
Silvercorp Metals, $31 million share offering. The company says it is propping up the treasury in case an interesting deal comes along.
Timmins Gold, $10 million non-brokered private placement. Timmins is nearing completion of its San Francisco gold mine in Mexico.
Even the smaller financings add up. Taken together, these amounts top C$270 million. Again, gold projects are getting the lion’s share of investment.
So that is the light at the end of the ramp. Investors have put over C$2 billion into Canadian mining companies this year. Money is still tight for all but the best-quality projects, but I think we are seeing the beginning of a more normal business climate for our mineral producers.