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January 2014: Annual Financings Updates

 

Financings Update

2013 proved to be a challenging year in the mining industry, particularly for those companies seeking to raise capital. With world economic instabilities, lowered commodity prices and decreased consumption in emerging markets, many companies witnessed their share prices falling significantly throughout the year. The S&P/TSX Venture Composite Index started the year at 1,239, dipping below 1,000 during the second quarter and finally wrapping up the year at a low 931.97.

Charting for S&P/TSX Venture Composite Index

Charting for S&P:TSX Venture Composite Index_2013

 

Additionally, S&P/TSX Capped Materials Index was down by 28% in 2013. As a result of the general market lows, returns on the Canadian stock exchanges were generally much less impressive than those in the U.S., since energy and materials form an overwhelming portion of recurrent stocks in Canada.

Charting for S&P/TSX Capped Materials Index

Charting for S&P:TSX Capped Materials Index_2013

 

With mining’s cyclical business, it’s understandable that economic volatility around the world was a major contributing driver to last year’s considerable losses. The TMX Group has released the following Financing Statistics for 2013 for all issuers on the TSX and TSX Venture exchange:

  • TSX total financings down from 723 to 599;
    • a -17.2% drop
  • TSX total financings raised was $39.9 billion in 2013
    • down -21.2% from $50.6 billion in 2012
  • TSX Venture total financings decreased from 1,888 to 1,614
    • a -14.5% drop
  • TSX Venture total financings raised was $3.78 billion in 2013
    • down -36.8% from $5.98 billion in 2012

Now that 2013 is safely behind us, 2014 is already lining up to be an eventful year, which we believe could advance the mining sector forward. Here at VADAR, we expect to see a substantial amount of acquisition activity throughout the year, as many of the industry majors will be looking to add solid projects to their portfolios at a fraction of the cost. Though we anticipate the road to recovery in 2014 will be bumpy, if Canadian equity investors develop their appetite for risk this year, it could benefit the more volatile, cyclical stocks.

Below is a list of the top mining companies listed on the TSX and TSX Venture exchange, which were successful in raising capital above $100 million dollars in 2013. Typically these deals go under a significant amount of due diligence before investments are made. Knowing which companies are able to raise equity capital in difficult markets can help guide investors looking for opportunities.

There is much success to be reaped as we move forward, and with the prospect of a more profitable year ahead, we wish all the best to our followers for a lucrative and more abundant 2014!

 

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Top Closed Equity Financings in 2013 over $100 million

Company
Capital Raised
Financing Share Price
Date Financing Closed
Share Price at Dec 31, 2013
Change*
Barrick Gold
+2%
Platinum Group Metals
+59%
Detour Gold
-54%
Platinum Group Metals
+8%
Allied Nevada Gold
-67%
Ivanhoe Mines
-6%
Guyana Goldfields
-52%
 

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