HOPE BAY
TMAC Resource's Catherine Farrow is trying to explain how tight-lipped she has to be about the company's anticipated initial public offering of $105 million, consisting of 52.5 million common shares with an expected offering price of $2 per common share.
Lee Winsor operates a drill at Doris Mine, part of the Hope Bay gold project which TMAC Resources is putting up for public offering. The organization recently released its 222-page preliminary prospectus for the initial public offering of 52.5 million common shares. - photo courtesy of TMAC Resources
|
"We don't want this thing to fall apart," the chief executive officer of the mineral exploration and development company explained to Nunavut News/North. "We want this thing to go."
She's watching what she says because she doesn't want to say anything that will discourage any investors from participating in the offering.
The company filed its 222-page preliminary prospectus on June 1, stating it plans to list the shares on the Toronto Stock Exchange. It will be the first IPO on the TSX in more than a year unless another beats them to it.
"It's based on the amount of capital we will require based on the capital expenditures laid out in the pre-feasibility study," she said, noting the number was calculated based on the work program required to get the company into production. "We arrived at that number for a reason. It's for anybody who wants to participate."
However, the prospectus notes that a "significant cornerstone investor base" is already in place, led by Resource Capital Fund VI L.P. and Newmont, which remain the largest TMAC shareholders. The two companies have committed to purchasing $45 million and $22 million of common shares in the IPO, respectively. The proceeds from the IPO is also being augmented by a debt facility of up to $120 million USD through the Sprott Resource Lending Partnership and Morgan Stanley Capital Group.
"It's a relief to be here but we've got a lot of hard work ahead of us in the next month or so."
The company's preliminary prospectus comes only a few weeks after it released its pre-feasibility for the Hope Bay gold project, with an updated mine-life estimate of 20 years and yield of 3.2 million ounces of gold reserves.
Other highlights from the preliminary prospectus include an estimated 14.3 million tonnes of mined ore, average annual gold production of 160,000 ounces, with peak annual gold production estimated at 183,000 ounces. The study also estimated that the Hope Bay Project will generate a pre-tax internal rate of return of 44 per cent and a post-tax internal rate of return of 40 per cent.
At press time, the price of gold was $1,183.70 USD, although the pre-feasability study was based on a price of $1,250 USD.
In the past, Farrow has said TMAC's goal is to get initial production started late next year.
In regard to the challenging fundraising environment acknowledged by many in the mining industry following this year's annual convention of the Prospectors and Developers Association of Canada in Toronto, Farrow said, "We're committed to seeing this process through. We just have to be patient and diligent and go through it in the proper way and we'll see what the outcome is on the other side."
Farrow said the choice for an offering only consisting of common shares was due to the fact that TMAC never considered doing it any other way, such as through units consisting of shares and warrants, the latter of which are a type of fundraising whereby people who buy them have the right to buy stocks at a set price in the future at a set time, or flow-through shares where the company's debt is passed on to investors for the purposes of reducing income taxes.
"We just wanted to make this available to as many people as possible," she said.
Interested investors are encouraged to contact the Bank of Montreal or CIBC, the lead underwriters of the project. The syndicate of underwriters also includes Dundee Securities Ltd, GMP Securities L.P., National Bank Financial Inc., Scotia Capital Inc. and TD Securities Inc.
