By Jeff Lewis and Helen Reid
TORONTO/JOHANNESBURG (Reuters) - Gold miners in Canada keen to tap new investors are eyeing secondary listings in London and New York, underscoring pent-up demand for the precious metal from generalist funds.
Gold prices
That has fuelled a cash surge for miners, who have hiked dividends and pledged cost discipline to broaden their appeal beyond a shrinking pool of resource-only investors.
A listing in New York or London opens the door for miners' shares to be included in many more exchange-traded funds (ETFs) - guaranteeing substantial liquidity and broadening their investor basis further.
"There is a lot of dumb money sloshing around in London in the mining space, and the gold miners want to soak it up," said Henry Steel, London-based portfolio manager at Odey Asset Management, which manages $4.9 billion.
That would help plug a large gap https://www.reuters.com/article/us-randgold-rsrcs-m-a-listing/randgolds-hook-up-with-barrick-to-leave-large-void-in-london-market-idUSKCN1MC11L in the London market left by Barrick Gold's (TO:ABX) (N:GOLD) 2018 tie-up with Randgold Resources (LON:RRS), which had been listed in London. Mining company listings in London have slowed in recent years.
GRAPHIC-Mining IPOs on the London market https://graphics.reuters.com/CANADA-MINING/LISTINGS/gjnvwxqjopw/chart.png
Canada's Yamana Gold Inc (TO:YRI) (N:AUY) and Endeavour Mining (TO:EDV) are among those weighing secondary listings.
Nearly half of global public mining companies are listed on the Toronto Stock Exchange and TSX Venture Exchange, owner TMX Group (TO:X) said.
But the number of mining IPOs and new issues in Toronto has fallen since 2018, indicating the market is losing some luster.
GRAPHIC-Toronto losing its shine for mining companies https://graphics.reuters.com/CANADA-MINING/LISTINGS/xlbvgbqjqpq/chart.png
In July, Yamana said it had applied for a secondary listing on the London Stock Exchange (LSE), which it said lacked sizeable pure-play gold producers with annual production of 1 million ounces or more.
There is "a good hand-to-glove fit of what is being looked for by investors and what we can offer," said Peter Marrone, executive chairman of Yamana, in an interview.
Toronto-listed Endeavour said it would decide by year-end whether to pursue a secondary listing in either London or New York after completing its acquisition of rival Semafo.
The company's management is London-based, making it a "natural landing for us," Chief Executive Sébastien de Montessus said on a call.
London investors have more risk appetite and are more comfortable with the complexities of African mining jurisdictions than in Toronto or New York, said a Johannesburg-based banker. Endeavour mines in Mali and Burkina Faso.
"That's an unquantifiable aspect that I think is driving London," he said, declining to be named. Greenland-focused gold exploration firm AEX Gold listed on AIM, the LSE's small company sub-market, on July 31. (L:AEXG)
"There's definitely room for more," said Paul Jourdan, CEO of Amati Global Investors in Edinburgh, which holds a 6.9% stake in AEX Gold.
"What AEX shows is that there is appetite in the London market, even for something early stage like that."