Mining companies ready to lead capital raises in Canada, says TSX CEO

Visitors to the BHP (formerly known as BHP Billiton) booth chat with representatives during the Prospectors and Developers Association of Canada (PDAC) annual conference in Toronto, Ontario, Canada March 4, 2019. REUTERS/Chris Helgren /File Photo

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TORONTO, June 27 (Reuters) – Mining companies seeking to accelerate exploration for critical rare minerals are expected to lead capital-raisings in Canada this year, the chief executive of the Toronto Stock Exchange said on Monday, as sectors such as as technology recedes. sits amid market volatility.

A big source of capital for the critical minerals sector this year is from big companies like BHP Ltd (BHP.AX) and Rio Tinto (RIO.AX), which are throwing their weight behind junior miners to help accelerate mining projects. exploration.

Young 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.

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“I think we’re going to see a sort of renaissance in the mining sector that we haven’t seen in years, given the changing global demand and supply,” the CEO told Reuters. of the Toronto Stock Exchange (TSX), Loui Anastasopoulos. emphasis on investments in critical minerals.

Raising capital on the Toronto Stock Exchange by mining companies will bolster Canada’s prospects for developing its vast deposits of key minerals, including cobalt, lithium, nickel and copper, which are essential to move away from the carbon-based energy. It could also help reduce dependence on China for critical minerals. The Asian economic superpower is home to around 50% of the world’s critical mineral deposits.

So far this year, Canadian-listed mining companies have raised C$3.1 billion, representing 25% of total capital raised on the TSX and TSX Venture Exchange (TSXV), compared to 18 % at the same time last year, according to TSX data. shows, while overall fundraising fell by around 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 financials at C$6.9 billion. Canadian dollars.

The TSX is betting that mining companies looking to add critical minerals to their portfolios will help make up some of the shortfall in capital raisings this year.

Calgary-based Lithium Chile (LITH.V) and Toronto-based Northern Graphite Corporation (NGC.V) led the capital raise 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 Toronto Stock Exchange this year.

‘A CAUTIOUS OPTIMISM’

Investment bankers also expect the trend of big mining companies pumping capital into junior miners to continue after BHP and Rio Tinto announced 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 batteries lithium. In February, BHP bought a 5% stake in Vancouver-based copper and gold explorer Filo Mining for C$100 million.

Lauren Bermack, partner and national head of mining deals at advisory firm PwC Canada, said when sentiment is down, it becomes difficult to raise capital in mining compared to blue chip companies.

But as 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.

TSX’s Anastasopoulos also sees bullish sentiment for the mining sector.

“We are cautiously optimistic…but something quite interesting is going to happen in the mining sector over the next 12 to 24 months,” he said.

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Reporting by Divya Rajagopal Editing by Paul Simao

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