Mining firms poised to lead capital raisings in Canada, TSX CEO says

Lithium Chile

27/06/2022 19:02

By Divya Rajagopal
    TORONTO, June 27 (Reuters) - Mining companies seeking to
accelerate exploration of scarce critical minerals are set to
lead capital raisings in Canada this year, the chief executive
officer of the Toronto Stock Exchange said on Monday, as sectors
such as technology take a back seat amid market volatility.
    A big source of capital for the critical minerals sector
this year is coming from large corporations like BHP Ltd
 BHP.AX  and Rio Tinto  RIO.AX , which are throwing their weight
behind junior miners to help expedite exploration projects.
    Junior miners are encouraged by the Canadian government's
plan, announced in this year's budget, to allocate C$4 billion
($3.1 billion) to critical minerals.
    "I do think we are going to see a bit of a renaissance in
mining that we haven't seen in years, just given what's
happening with global demand, supply," Toronto Stock Exchange
(TSX) CEO Loui Anastasopoulos told Reuters, pointing to the
focus on investments in critical minerals.
    The raising of capital on the TSX by mining companies will
bolster Canada's prospects of developing its vast deposits of
critical minerals, including cobalt, lithium, nickel and copper,
which are key to achieving the transition away from carbon-based
energy. It could also help reduce the reliance on China for
critical minerals. The Asian economic superpower is home to
about 50% of the global critical minerals deposits.
    So far this year, mining companies listed in Canada have
raised C$3.1 billion, accounting for 25% of the total capital
raised on the TSX and the TSX Venture Exchange (TSXV), compared
to 18% in the same period last year, TSX data shows, while
overall raising of funds has dropped by about 54%. Last year,
technology companies led the way among equity sectors with
C$13.8 billion in funds raised, followed by mining at C$10
billion and financial services at C$6.9 billion.
    The TSX is betting that mining companies looking to add
critical minerals to their portfolio will help make up for some
of the shortfall in capital raisings this year.
    Calgary-based Lithium Chile  LITH.V  and Toronto-based
Northern Graphite Corporation  NGC.V  lead capital raising in
2022 with a total of C$51 million through private placements.
Anastasopoulos said at least six more mining companies are
expected to list on the TSX this year.
    
    'CAUTIOUSLY OPTIMISTIC'
    Investment bankers also expect the trend of large mining
companies injecting capital into junior miners to continue after
BHP and Rio Tinto announced their plans to invest in explorers.
    In June, Rio Tinto agreed to pay C$10 million for a 10%
stake in British Columbia-based Nano One Materials Corp
 NANO.TO , which is engaged in the production of cathode
materials used in lithium batteries. In February, BHP bought a
5% stake in Vancouver-based copper-gold explorer Filo Mining for
C$100 million.
    Lauren Bermack, a partner and national deals mining leader
at consulting firm PwC Canada, said when sentiment is down it
becomes difficult to raise capital in mining as compared to
blue-chip companies.
    But since the outlook for critical minerals is strong,
investors with risk appetite are looking to invest in assets
that are trading at reasonable prices, she added.
    Anastasopoulos of the TSX also sees upbeat sentiment for the
mining sector.
    "We are cautiously optimistic ... but something quite
interesting will happen in the mining space over the next 12 to
24 months," he said.

 (Reporting by Divya Rajagopal
Editing by Paul Simao)
 ((divya.rajagopal@thomsonreuters.com;))