UPDATE 2-Timmins Gold joins new mining rush to equity markets

Wed Jan 22, 2014 5:44pm EST
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By Euan Rocha

TORONTO Jan 22 (Reuters) - Timmins Gold Corp, which owns the San Francisco gold mine in Mexico, said on Wednesday it will sell C$25 million ($22.7 million) in equity to a syndicate of banks, making it the latest in a slew of recent share offerings from Canadian miners.

The Timmins deal, aimed at strengthening its balance sheet, builds on a wave of offerings that potentially signal a thaw in the financing environment for mining companies, which have long been out of favor with investors.

The bank syndicate, led by RBC Capital Markets, will buy the shares at C$1.50 each, a significant discount to Timmins Gold's C$1.73 closing price on the Toronto Stock Exchange on Tuesday.

The offering is being done on a bought deal basis. A bought deal occurs when an underwriter, or a syndicate, buy shares from an issuer at a set price before selling them to the public.

While these deals typically occur at a slight discount to a company's last trading price, the large discount that Timmins agreed to underscores the challenges still facing gold miners.

"New issue discounts are a factor of market sentiment," said Peter Miller, the head of equity capital markets for BMO Capital in Canada.

"If you look at the same deal done today, as it would have been done two years ago, the discounts are larger today and that is not unusual given that it's early days in terms of these mining and development companies being able to access the equity markets again."   Continued...