The moribund market for commodity companies flotations may be coming back to life. Laguna Gold, a Chile-focused gold and zinc miner, is set to list its shares on the London Stock Exchange in a £24 million initial public offering.
Laguna, which operates El Toqui mine in southern Chile and had revenues of just under $40 million last year, is thought to be the largest mining float on the main market since Polymetal made its debut in 2011.
A downturn in commodities prices all but shut down the London market for mining group IPOs during 2015 and 2016. However, metals prices have recovered over the past year, although that of gold is still languishing well below its peak of more than $1,800 per ounce, reached in September 2011. On Friday, gold prices were hovering around $1,333 an ounce.
Laguna, which was founded in 2013 and is based in Melbourne, Australia, produced 19,496 tonnes of zinc and 11,800 ounces of gold in 2017. It has a string of exploration projects at five other sites in Chile.
The company plans to use the proceeds of the IPO to conduct new drilling at El Toqui, which has been in operation for more than 33 years. Without investment to identifiy new reserves in the area, the mine’s reserves could be exhausted within two years, the company said.
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“The directors believe there is potential to extend this to over ten years,” Laguna said in a statment. “The company is undertaking considerable exploration in the vicinity of the mine to locate new ore bodies, which could be incorporated to extend the mine life.”
Kevin Robinson, its chairman, said: “We are in a strong position as [we] develop the assets already identified and potential discoveries.”
Peel Hunt and BMO Capital Markets have been appointed joint bookrunners for the flotation.