National Post (National Edition)
Superior joins Freshii in IPO queue
If Freshii Inc. is set to become the year’s first initial public offering — road shows for the company’s part-secondary and part treasury offering are underway and pricing is set for next week — we now know who is expected to win the award for the second IPO of 2017.
Step forward, Superior Gold Inc. which started marketing its offering of regular common shares this week. (Freshii, which intends to price its shares in the $8.50 — $10 range and hopes to sell at least 10.9 million, is offering subordinate voting shares.)
Superior, which was formed last July and acquired the Plutonic gold operations from Australia’s Northern Star Resources last October, has more modest ambitions: it is seeking between $13.5 million and $14.5 million from the sale of shares that are expected to be priced at $1. In addition, it plans to list the shares on the TSX Venture Exchange, whereas Freshii has made application to list on the TSX.
There is a sense of déjà vu in the Plutonic mine being owned by Canadians. Until late 2013, Barrick Gold Corp. owned the mine. Then it was sold to Northern Star for A$25 million. Barrick acquired that mine of 2001 when it purchased Homestake Mining. And now it is in Canadian hands once again.
Apart from owning the Plutonic gold mine (which is a producing underground operation that started production in 1990) Superior also owns the Hermes openpit development project and has an interest in the Bryah Basin joint venture. Northern Star acquired the non-Plutonic assets in early 2015. It was a willing seller to Superior because it wanted “to receive North American market exposure.”
All those operations are in the middle of Western Australia — which on a normal day would be one of the hottest places in that country. How hot? In the first 17 days of 2017, the mean maximum temperature has been 37.3 C with the range being 30.1 C to 43.6 C.
Some well-known names are behind the new company. At the top of the pile is Chris Bradbrook, the former chief executive (from Feb. 2009 to May 2010) at New Gold and the former corporate development boss at Goldcorp. Bradbrook is Superior’s chief executive. Also well known is Mark Wellings, a former mining executive turned investment banker: for 18 years ending 2004, Wellings was a key player in GMP’s mining corporate finance team. Wellings will be chairman at Superior.
The goal for Plutonic, which produced about 64,000 ounces last year, is to extend the “mine life beyond five years through expansion of reserves and resources.”
To achieve that goal, about two-thirds of the expected proceeds from the offering are to be spent at the Plutonic mine.
GMP is the lead manager on the financing. BMO Capital Markets, Cormark Securities, Haywood Securities, TD Securities and Sprott Private Wealth will assist it.
Aside from the six per cent cash commission, the underwriters are also receiving compensation warrants. The financing comes after a few months after Superior issued special warrants (each priced at $0.50) to help finance the purchase of the Plutonic mine. GMP also placed that special warrant with investors.
A strong ongoing connection with Northern Star is one of the unusual aspects about the offering. For example, Northern Star, which received an initial $12.5 payment when it sold the mine, is set to become Superior’s largest shareholder after the financing. As well there are other event-dependent payments including a net smelter return royalty.