The IPO market witnessed strong activity in the early weeks of the year, at times matching last year’s highs, but the momentum waned as the year progressed. However, some important IPO aspirants are preparing for their market debut, braving the volatile economic conditions, and Ivanhoe Electric Inc. is one of them.
The Vancouver-headquartered mining exploration company this week set terms for its stock market debut. It is planning to go for dual-listing on the Toronto Stock Exchange and NYSE American, both under the ticker symbol IE. The book-runners in the offering are BMO Capital Markets, Jefferies, and J.P. Morgan.
14.4 Mln Shares
As per the company’s regulatory filing, it will offer 14.4 million shares. The estimated offer price is in the range of $11.75 to $12.50, which translates into a fully diluted market value of about $1.2 billion at the mid-point.
Established in 2020, the company is owned by mining billionaire Robert Friedland, the founder of Ivanhoe Mines. It is engaged in the development of mineral and metal mining infrastructure in the U.S. with a focus on copper and gold. The projects are in various stages of development and are yet to generate revenue.
According to the management, Ivanhoe is on a mission to provide the important metals required for electrification projects in the U.S. Its operations are focused on developing mines from mineral deposits located in the country.
Focus on US
Ivanhoe’s material mineral projects in the U.S. are the Santa Cruz Copper Project in Arizona and the Tintic Copper-Gold Project in Utah. The other important projects, in which the company has direct and indirect interests, are the Hog Heaven Silver-Gold-Copper Project in Montana and the Sama Nickel-Copper-Palladium Project in Ivory Coast.
The primary factor that puts the IPO in the spotlight is Friedland’s leadership and his track record as a highly successful entrepreneur. Also, Friedland is supported by a team of highly experienced mining executives and geologists. With the global cry to reduce carbon emissions and promote sustainable energy production getting louder, the environment-friendly business model adopted by companies like Ivanhoe is gaining relevance. Such factors are expected to positively influence market sentiment when it comes to the response to the IPO.
However, the business of developing mines is highly speculative and is prone to multiple risks, especially when Ivanhoe does not directly operate any mine. Also, the company’s post-earnings prospects would depend on its ability to generate positive cash flows and net profit.
For the fiscal year ending December 2021, Ivanhoe reported total revenues of $4.65 million, which is broadly in line with its performance in the previous year. The company incurred a net loss of $59.3 million or $0.96 per share last year, compared to a loss of $25.5 million or $0.42 per share in fiscal 2020.
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