The IPO Buzz: Ivanhoe Electric Prices IPO at the Low End

Ivanhoe Electric Inc. (IE) priced its IPO on Monday night (June 27, 2022) at $11.75 – the low end of its $11.75-to-$12.50 price range – and sold the full 14.39 million shares listed in the prospectus. The deal, a carryover from last week, raised $169.08 million.  Ivanhoe Electric’s stock opened flat at $11.75 in its debut on the NYSE American on Tuesday (June 28) and rose to an intraday high at $12.04 before slipping 20 cents to trade at $11.55, down 1.7 percent from its IPO price, at around 11:26 a.m. EDT. Volume was 3,078,543 shares, according to the NYSE American. The stock closed Tuesday at $10.80, down 8.09 percent from its IPO price, in a slide that meant Ivanhoe Electric was a broken deal on its first day of trading. Ivanhoe Electric’s stock also started trading Tuesday on the Toronto Stock Exchange (TSX). (Editor’s Note: This column, initially published on Monday night, June 27, 2022, was updated at 11:26 a.m. EDT on Tuesday to include news on Ivanhoe Electric’s stock performance in its NYSE American debut. The column was updated again after Tuesday’s close to include Ivanhoe Electric’s settlement on the NYSE American.)

The pricing on Monday night follows last week’s drama when the deal was delayed on Thursday morning (June 23) just hours ahead of its expected pricing that night. 

The Canadian copper and gold mining company’s deal was the first big IPO since mid-May.

BMO Capital Markets, Jefferies and J.P. Morgan were the joint book-runners.

Bankers launched the deal on Friday morning, June 17 – hours ahead of the start of the long U.S. holiday weekend. The U.S. stock market was closed a week ago – on Monday (June 20, 2022) – for the federal holiday in observance of Juneteenth (June 19, 2022), which marks the end of slavery in the United States.

Principal stockholders include some Fidelity Contrafund entities, according to the prospectus. Fidelity listed this IPO on its calendar for clients.

Some IPO investors said they were wary of this deal, citing Ivanhoe Electric’s net losses and their concerns about valuation – especially against the backdrop of a bear market.

Ivanhoe Electric was founded in 2010 by mining billionaire Robert Friedland, 71. He made his name with the development of the Voisey’s Bay nickel mine in Labrador (Canada) and the Oyu Tolgoi copper and gold project in Mongolia. (Worth noting – This story published Sunday, June 19, 2022: Mining billionaire Robert Friedland launches IPO for Ivanhoe Electric – The Globe and MailFriedland’s business empire ranges from Ivanhoe Mines and Ivanhoe Capital to SK Global Entertainment and Ivanhoe Pictures. He was an executive producer of “Crazy Rich Asians,” the 2018 rom-com hit.

Ivanhoe Electric’s principal executive offices are in Vancouver, British Columbia. But its two major mining projects are in the United States – specifically the Santa Cruz Copper Project, about an hour’s drive south of Phoenix, Arizona, and the Tintic Copper-Gold Project, about an hour’s drive south of Salt Lake City, Utah.

“We have the option to acquire 100 percent of the mineral rights constituting the Santa Cruz and Tintic projects,” the prospectus says.

The company has not generated any revenue yet from its mining activities, which are in the E&D (exploration and development) stage. It also owns a vanadium flow battery business that serves the electric grid and the telecom industry and a geophysical data-processing business that caters to the oil and gas industry and the mining industry.

Ivanhoe Electric is not profitable. For the 12 months that ended March 31, 2022, the company had a net loss of $70 million on revenue of about $9.86 million.

Total debt was $82.22 million, as of March 31, 2022.

In the prospectus, Ivanhoe Electric says its mission is “to support American supply chain independence and deliver the critical metals necessary for electrification of the economy.”

The company wants to be an American supplier of copper, gold, nickel, silver, cobalt and other metals or minerals deemed essential for the transition from fossil fuels to renewable energy.

The world is facing a shortage of copper, due to the shift to electric vehicles (EVs) and clean energy, the prospectus says. Electric vehicles use up to four times the amount of copper needed to produce an ICE (internal combustion engine) car or truck, according to an IDTechEx report produced for the International Copper Association. Solar power and wind power require a lot more copper than fossil-fuel and nuclear plants, according to the prospectus.

Most of the world’s copper, for example, is produced in non-OECD countries, including many deemed to be “authoritarian” such as Russia and China, the prospectus says.

After the Fourth of July

Next week will be a short one. The U.S. stock market will be closed on Monday, July 4th, for the Fourth of July, also known as Independence Day in the United States. Only a few deals are in the wings for pricing next week. But more IPOs could land on the launch pad as the filings continue to flow into the IPO pipeline.

Stay tuned.

(For more information on these companies, please see our:

IPO Calendar – Click on the company’s name and the hyperlink will take you to the company’s IPO Profile, which includes a link to the prospectus.)

(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)

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