Veteran plans IPO to finance Hope Bay

TORONTO • Terry MacGibbon is trying to do something that Canada’s battered mining sector hasn’t seen in a long time — a major initial public offering.

Then comes an even trickier proposition: building a remote gold project in the far North that a senior producer gave up on. “It fits right into our wheelhouse,” MacGibbon, 68, said in an interview.

The well-known mining entrepreneur announced plans this week to take TMAC Resources Inc. public. The Toronto-based company, which bears his initials, launched a preliminary prospectus for a $105-million IPO on the Toronto Stock Exchange. It could be worth up to $121 million, if demand is strong enough.

There hasn’t been a mining IPO on the TSX since late 2012, according to Bloomberg. Investors have turned away from junior mining plays in droves due to stagnant commodity prices and the fact that other sectors are performing much better.

But MacGibbon, TMAC’s executive chairman, has a solid track record and a strong following on Bay Street.

After three decades at Inco Ltd., he left in 1997 and formed FNX Mining Company Inc., a highly successful Sudbury mining firm. FNX later merged with Quadra Mining Ltd., and the combined company was sold to KGHM Polska Miedz SA in 2012 for nearly $3 billion.

MacGibbon has stayed busy since then, acting as chairman of Torex Gold Resources Inc. and INV Metals Inc. But his biggest focus has been TMAC, which raised $157 million as a private company.

TMAC plans to develop the Hope Bay project in Nunavut, which has a checkered history. U.S. gold giant Newmont Mining Corp. paid $1.5 billion for it in 2007, thinking it was getting its hands on a massive mining district up North. But exploration did not go as well as hoped, and the company never put forward a strong development plan. Hope Bay fell off Newmont’s priority list and got written down in 2012.

That paved the way for TMAC to acquire it in 2013 through an all-stock deal (Newmont owns 37 per cent of TMAC shares today). MacGibbon brought some of his former FNX colleagues together and they got to work on Hope Bay.

“We’re very good at mining high-grade, underground deposits,” he said. “And in addition to that, we’ve had a great history of exploration success. We found eight mines up in Sudbury and put five into production.”

TMAC had a very successful drilling program at Hope Bay in 2014, boosting the measured and indicated resources by 59 per cent to 4.4 million ounces. MacGibbon and his team benefited from historical data on the project, as Newmont and other companies spent more than $1 billion on it.

Six weeks ago, TMAC released a pre-feasibility study for Hope Bay that envisions a mine producing an average of 160,000 ounces of gold a year at very low all-in sustaining costs of US$785 an ounce.