Tacora Resources, an iron ore mining and processing business, this week priced its recently filed initial public offering in Canada.
The Grand Rapids, Minnesota, company is seeking to raise $125 million by selling common shares at $16 to $19 per unit, the updated prospectus shows. The issue’s greenshoe option, if fully exercised, would bring the total closer to $144 million.
Final pricing is slated for June 14. If successful, Tacora expects to achieve a market capitalization of about $379 million to $427 million.
Tacora will use the proceeds to help finance the restart of the shuttered Scully Mine in Wabush, Newfoundland and Labrador. The company acquired the operation last year in a court-supervised process.
Scully, which makes iron ore concentrate, a key raw material in steelmaking, was formerly owned by U.S. mining giant Cleveland-Cliffs.
Cleveland-Cliffs idled the 49-year-old site in 2014 due to high costs and slumping commodity prices. Several affiliated businesses obtained creditor protection the following year.
The mine is now controlled 27 percent by Tacora’s management and 73 percent by Proterra Investment Partners, a U.S. private equity firm. Proterra has been investing in natural resources since 2016, when it spun out of Cargill’s investment arm.
Restarting Scully will involve initial spending of about $210 million, Tacora estimates. Along with utilizing IPO proceeds, it will finance the outlay through debt transactions.
Tacora, incorporated in British Columbia in 2017 and currently without revenue, expects to pay back the expenditure roughly three years after relaunching production at Scully and commencing shipments of concentrate.
The company expects to do this and leverage longer-term opportunities through improved market dynamics. They include increasing global demand for high-grade iron ore, especially in China, a major steel producer that is turning to high-quality material as a way to control pollution.
The strategy will benefit from a deal struck at the time of Scully’s acquisition. Tacora then agreed to sell 100 percent of the mine’s concentrate output to former Proterra owner Cargill, one of the world’s largest traders of iron ore. The agreement runs for six years.
With the IPO’s close in late June, Proterra is projected to hold just over half the company’s issued and outstanding shares, according to the prospectus. That interest drops to about 48 percent if the greenshoe option is exercised in full.
Tacora will list on the Toronto Stock Exchange under the symbol TCRA.
BMO Capital Markets and Jefferies Securities are leading the issue, with CIBC World Markets, National Bank Financial, Canaccord Genuity, Cormark Securities and GMP Securities as co-managers.
Tacora is one of four Canadian PE-backed companies to announce or complete an IPO since January. The first of 2018 belonged to industrial wood-pellet maker Pinnacle Renewable Energy, backed by ONCAP, which raised $172 million in February.
It was followed in April by human-resources-software provider Ceridian HCM, backed by Thomas H. Lee Partners and Cannae Investors, which raised US$462 million from its Canadian and U.S. issue.
And this month beauty specialist Marc Anthony Cosmetics, backed by TA Associates, filed for an IPO that is reportedly seeking as much as $250 million.
Public debuts in Canada have been expected to accelerate in 2018 in the wake of a strong 2017, when IPOs raised a five-year record of $5.1 billion, PwC reported. Despite a quiet Q1 2018, PwC suggests the outlook continues to be positive due to a robust pipeline of new issues.
PE Hub Canada in December estimated a dozen Canadian PE- and venture-backed IPOs raised $2.3 billion last year.
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