Robert Friedland’s latest mining venture stumbled on its first day of trading, after launching into the most hostile stock market environment since the start of the pandemic.
Vancouver-based Ivanhoe Electric Inc. IE-N priced its initial public offering at US$11.75 a share, and raised US$169.1-million. Just over a week ago, as the company made its final rounds to investors in order to lock in orders, it had targeted selling its shares as high as US$12.50 apiece.
Ivanhoe Electric intends to use part of the proceeds to fund exploration at its Santa Cruz copper development project in Arizona and its Tintic copper and gold property in Utah.
Over the past few weeks, global stock markets have corrected into bear market territory, as fears grow that a global recession is imminent with central banks spiking rates in an attempt to rein in runaway inflation. Copper, the metal that Ivanhoe Electric is most exposed to, has also been crushed.
Ivanhoe Electric came under pressure right away on trading on the New York Stock Exchange on Tuesday, falling by 8.1 per cent on its debut to close at US$10.80 apiece.
Still, the Ivanhoe Electric IPO was the biggest in the United States since May and showcases once again the ability of Mr. Friedland to raise money no matter how the market is performing.
The billionaire is one of Canada’s best known financiers of early-stage mining companies and has been doing so for decades. Some of his companies have performed spectacularly well, while others have disappointed. He sold his Voisey’s Bay nickel project in Labrador, which he discovered in the 1990s, to Canada’s Inco for $4.3-billion. Voisey’s is still producing today.
He is also credited with discovering the vast Oyu Tolgoi copper project in Mongolia. Global mining giant Rio Tinto eventually developed the mine, but has struggled mightily with the project, going billions over budget and encountering myriad technical problems.
In recent years, Mr. Friedland has expanded Ivanhoe Mines Ltd. IVN-T from a development-stage company into a major copper producer. Funded in large part by Chinese investors, Ivanhoe’s Kamoa-Kakula copper mine started production in the Democratic Republic of the Congo last year.
The Ivanhoe Electric IPO was led by BMO Nesbitt Burns Inc. and New York-based Jefferies Group LLC.
Ivanhoe Electric, which also trades on the Toronto Stock Exchange, hopes to eventually produce metals that may feed into the nascent electric-vehicle supply chain in the United States. Copper is one of a handful of metals, including lithium, cobalt and graphite, which are used in electric vehicle (EV) batteries. China dominates the market for many critical minerals.
“We believe the United States is significantly underexplored and has the potential to yield major new discoveries of these metals,” Ivanhoe Electric wrote in its prospectus.
The company also points to Utah and Arizona’s mining-friendly reputation as a plus for its projects there. Over the past few years, investors have been reminded on several occasions of the perils of operating in riskier mining jurisdictions. Kinross Gold Corp. earlier this year was forced to sell its gold mines in Russia at a deep discount after the invasion of Ukraine. Similarly, Centerra Gold Inc. earlier this year agreed to sell its giant Kumtor mine to Kyrgyzstan at a fraction of its worth after the former Soviet Republic nationalized the asset last year.
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