By Ayoni Agbabiaka
Abuja
On the eve of listing, Nexa Resources, spun out of Brazil’s Votorantim conglomerate, lowered the price of its initial public offering to $16 per share from the previously expected range of $18–$21 per share.
Nexa, a major zinc producer with five operating mines in South America, raised just shy of $500m last Friday making it the third largest mining IPO in Canadian history.
Any metals and mining IPO would be tough to do. There is a lot of scar tissue among dedicated metals and mining investors
The company may have left some money on the table for the 31 million shares offered – after a nice 10% pop on Friday, the counter was up again today adding 3.7% to trade at $18.05 a share for a market value of just over $2 billion in New York.
Reuters reported ahead of the listing that the IPO would be closely watched to gauge the health of the industry quoting an unnamed market participant as saying “any metals and mining IPO would be tough to do. There is a lot of scar tissue among dedicated metals and mining investors.”
Nexa, with mined zinc production of around 417,000 tonnes last year, is a top five refined zinc producer behind the likes of Swiss diversified giant Glencore, India’s Vedanta and Canada’s Teck Resources. Zinc accounts for 64% of its production and together with its copper, lead, silver and gold output Nexa produced 651,000 tonnes of zinc equivalent last year.
Almost half of Nexa’s production is from a single mine, Cerro Lindo in Peru and the company traces its history back to the start-up of its Atacocha mine in Peru in 1938.
The company said some of the proceeds of the offer is destined for two large greenfield projects, Aripuana in Brazil and Shalipayco in Peru which together would add more than 94,000 tonnes to zinc production according to the company’s prospectus.
Zinc traded at $3,197 a tonne ($1.45 a pound) in London on Monday, up 24.7% year to date and near 10-year highs struck at the start of October. Last year the metal, mainly used to galvanize steel, averaged more than a $1,000 a tonne below today’s ruling price.
West African increases gold project
Gold developer, West African Resources has reported a 105% increase in ounces at the M1 South deposit at its Sanbrado gold project in Burkina Faso.
West African reported that the M1 South deposit is now estimated to host 1.2-million tonnes of ore, grading 14.4 g/t gold for 556 000 oz of gold in the indicated category, and a further 0.41-million tonnes, grading 14.4 g/t gold for 191 000 oz in the inferred category.
The company also reported a 40% increase in ounces at the M5 deposit, which is now estimated to host 35.9-million tonnes, grading 1.3 g/t gold for 1.46-million ounces of indicated gold, and a further 12-million tonnes, at 1.1 g/t gold for 410 000 oz of inferred gold.
MD Richard Hyde said that the new resource estimates were just a snapshot of the project at the current point in time, with West African expecting resources to continue to grow as infill and extensional drilling is ongoing, and mineralization remained open at depth.
“The results show that Sanbrado gold project is a leading gold development project in West Africa. We expect to deliver a further resource update in the first quarter of next year, ahead of the completion of an updated feasibility study in mid-2018.”
