Miner Ivanplats Plans IPO
Ivanhoe Nickel & Platinum Ltd., the mining company known as Ivanplats, plans to go public this year in an offering that could raise between $750 million and $1 billion, people familiar with the matter said.
In recent weeks, Ivanplats has been interviewing various banks for the initial public offering of stock, which could value the company at more than $5 billion, although the current valuation could change based on copper prices, political stability and the development of actual mines, these people said. Robert Friedland, the chief executive of Ivanhoe Mines Ltd., is a controlling shareholder of Ivanplats, with a stake of about 30%. Institutional investors own the rest of Ivanplats. Ivanhoe, which owns 8% of Ivanplats, is also considering its own sale or breakup.
Ivanplats"s mineral holdings include a nickel, platinum and copper deposit in South Africa as well as a copper and cobalt discovery in the Democratic Republic of Congo. The company, which has offices in South Africa and Canada, has explored going public in the past, most recently in 2007. But it held off because of the global economic slump.
Now, with commodity prices on the upswing and high demand for raw materials from developing countries, Ivanplats stands to benefit from a public offering, the people familiar with the matter said. A Wednesday mining-industry report by Ernst & Young said 2011 will be marked by a flurry of IPOs, driven by pent-up demand for public equity and the desire to provide "shareholder exposure to strong commodity prices."
Representatives for Ivanplats and Ivanhoe declined to comment.
Ivanplats, which plans to list on the Toronto or London stock exchanges, could still decide to delay the IPO, according to these people. Citigroup Inc., Morgan Stanley, BMO Capital Markets Ltd. and UBS AG are among the banks vying for the underwriting job, they added.
The potential public offering of Ivanplats comes as Mr. Friedland"s other company, Ivanhoe, assesses its future options with the help of Citigroup, the people familiar with the matter said.
One plan would involve spinning off all its assets, except for a stake in Mongolia"s Oyu Tolgoi mine, to shareholders, followed by an auction for the Mongolian asset, they said. Ivanhoe owns 66% of Oyu Tolgoi, one of the world"s largest untapped gold and copper mines; the Mongolian government owns the rest. In this scenario, Ivanhoe"s assets in Kazakhstan, Australia, Indonesia and the Philippines would become a separate company led by Mr. Friedland, these people said.
Another plan would involve Ivanhoe selling its stakes, except for Oyu Tolgoi, to individual buyers, and then running an auction for the remainder of the company. Its Kazakhstan gold mine and Ivanhoe Australia are valued upward of $1 billion each.
A third option is to run an auction for the entire company, although that could be difficult to do given that Anglo-Australian miner Rio Tinto owns 42.1% of Ivanhoe, and has the right to raise its stake to 49%. Mr. Friedland owns 15.5% of Ivanhoe.
In 2006, Mr. Friedland, who has publicly compared himself with Apple Inc. CEO Steve Jobs, was lauded in the mining industry for securing Rio as a partner to develop the Oyu Tolgoi mine. But the project"s future had been up in the air amid a dispute between Ivanhoe and Rio over Ivanhoe"s desire to raise equity to fund the project. After the two sides settled their spat in December, Ivanhoe on Jan. 27 said that it had raised almost $1.2 billion in a rights offering. The funding will help finance construction of the gold and copper mines in southern Mongolia. While Rio doesn"t have a direct stake in Oyu Tolgoi, it effectively has operating control of it because of its position in Ivanhoe.
The talks about the future of Ivanhoe and its Mongolian mines are still under way and a final decision has yet to be made, the people familiar with the matter said. That could happen over the next few months, and before January 2012, when a standstill agreement between Rio and Ivanhoe ends.