TMAC Resources Inc., the first mining company to have an initial public offering on the Toronto Stock Exchange in more than two years, fell 6.5 percent in early trading.
The shares, which were sold in the IPO at C$6 ($4.70) apiece, traded at C$5.61 at 10.26 a.m. Toronto time, joining a wider selloff of gold and gold-mining equities.
TMAC raised C$135 million in the offering to help develop its Hope Bay gold mine in the Canadian territory of Nunavut. The company will also use C$65 million of available cash plus a debt facility of as much as C$153 million to fund construction of the mine, located 160 kilometers (99 miles) north of the Arctic circle, Chairman Terry MacGibbon said.
The offering follows a difficult period for gold mining, with two straight annual gold-price declines prompting some of the largest companies in the industry to reduce costs and sell less-profitable mines. The previous mining IPO on the Toronto Stock Exchange was completed by Oban Mining Corp., a Canadian gold explorer, in October 2012.
“To raise money in this market, we have a lot of people supporting both the project and the management team,” MacGibbon, a gold-mining veteran who founded explorer FNX Mining Co., said in an interview Monday.
TMAC is sufficiently capitalized into December 2016, when it expects to get the first gold out of the ground at the mine, MacGibbon said. As a result, he said TMAC won’t be seeking strategic partnerships beyond those it already has with Newmont Mining Corp., from whom it acquired the project, and Resource Capital Fund VI LP, which he said will own about 35 percent of the company after the IPO.
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