Mining companies raise capital at a decade‑high pace despite gold surge

Publicly listed mining companies are dumping shares into the market faster than they have in ten years, and no one’s blinking.

With gold prices having surged most of the year and demand for critical minerals climbing, North American miners have raised $2.9 billion across 185 deals in October alone. That’s the biggest monthly tally since November 2013, according to Bloomberg.

Gold and silver miners made up one-third of October’s equity deals, even though the prices of both metals slipped after October 21.

Still, investors haven’t flinched. There’s cash chasing deals left and right. “I can’t even think of a deal that’s struggled for the last while,” said Daniel Nowlan, vice-chairman at National Bank Capital Markets. “Almost everything’s been oversubscribed—many deals have been upsized, so the market’s been very strong.”

Junior miners raise most of the cash, not the giants

This record-setting run wasn’t driven by the big-name giants dumping blocks of shares. It came from the little guys.

According to Peter Miller, head of equity capital markets at Bank of Montreal, “the activity in the market so far has been entirely dominated by a plethora of junior miners.” There haven’t been large deals by a few majors, it’s been a swarm of smaller companies grabbing every dollar they can.

One of the biggest raises came from NexGen Energy Ltd., a uranium miner listed in Toronto, New York, and Sydney. They pulled in C$400 million ($287.2 million) in a bought deal, followed by an upsized A$600 million ($395.9 million) sale in Sydney.

The largest precious metals deal came from Hycroft Mining Holding Corp., a Denver-based gold and silver producer. They raised $171.4 million, taking the top spot in the gold and silver category for October.

Demand is strong because investors who missed out on gold’s run this year are now scrambling. “If you were an investor this year that didn’t have appropriate exposure to the sector, you will have lagged from a performance perspective,” said Michelle Khalili, global head of ECM at Bank of Nova Scotia.

That underperformance is now pushing money back into precious and base metals, with investors trying to balance their portfolios.

U.S. government backing and copper prices drive critical minerals deals

There’s also a sharp rise in demand for critical minerals, helped by the U.S. government’s push into the space.

Near-record copper prices are another driver. Nowlan said this mix of support and pricing strength will keep the deals flowing “for a while,” even though gold and silver prices dropped recently.

According to Miller, metal prices don’t need to be at “stratospheric” levels for these companies to keep selling shares, just “buoyant” enough to justify market interest.

Bloomberg data showed Bank of Montreal was the busiest advisor on these deals in October.

Miller said they’re already seeing a full November lineup forming. This pace isn’t slowing. Every day brings a new batch of offers, and investors aren’t turning them down. John Ciampaglia, CEO at Sprott Asset Management, said, “We haven’t seen that much capital come into the space in a long time.”

More IPOs, SPACs, and equity raises are expected. Subash Chandra, analyst at Benchmark Co., said, “You are going to see a lot of these companies come to market, IPO, SPACs, raise equity. They’re all going to be in this competitive froth to get to market first.”

Gold stocks now make up 12% of the S&P/TSX Composite Index in Canada. And in the U.S., Newmont Corp. has doubled in value this year. Even with its recent pullback, it’s still one of the top ten stocks on the S&P 500.