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On its first day of trading, shares in Nexa Resources SA, which is the world’s fourth-largest zinc miner, a, closed at $17.40 (U.S.) a share in New York, up 9 per cent from its $16 IPO price. It closed at $22.24 (Canadian) in Toronto.Mark Blinch

After a dreadful debut from Roots Corp. earlier in the week, investors warmly welcomed the initial public offering (IPO) of Nexa Resources SA, which took off on its first day of trading on the Toronto and New York Stock Exchanges on Friday.

Shares in the the Luxembourg-based company, which is the world's fourth-largest zinc miner, with operations in South America, closed at $17.40 (U.S.) a share in New York, up 9 per cent from its $16 IPO price. It closed at $22.24 (Canadian) in Toronto.

Nexa raised $496-million (U.S.), which makes it the third-biggest mining IPO ever on the Toronto Stock Exchange, according to data from Thomson Reuters. The biggest was royalty streaming company Franco-Nevada Corp., which raised $1.3-billion (Canadian) in a 2007 offering. The second-largest was base metals miner Falconbridge Ltd. which raised $750-million in 1994.

In an interview, Nexa's chief executive Tito Martins said he wasn't concerned that Roots' disappointing IPO performance would affect his firm's debut. But the fact that this was the first major mining IPO in some time was a concern.

"Of course we were worried about being a mining company, having an IPO right now, since there has not been a [large mining] IPO in the Americas in almost 10 years," Mr. Martins says.

"But everything went very well."

The success of the Nexa IPO is also a big win for TMX Group Ltd., parent of the TSX, as the company chose to list on Canada's benchmark exchange and not one of its global competitors. Mr. Martins said Nexa considered other stock exchanges, including the London Stock Exchange (LSE), but eventually settled on New York and Toronto.

"It's natural for us," he said of Nexa's decision to list in Canada. "The mining business has a very strong presence on the Toronto Stock Exchange."

In an interview, Rob Peterman, vice-president, global business development with TMX Group, said the exchange worked closely with investment banks to win the Nexa listing, with its pitch based on making it clear to the miner that almost half of the capital raised for publicly traded mining companies over the past five years has been on either the TSX or the TSX Venture Exchange.

After a number of years in the dumps, the Canadian mining IPO market has bounced back strongly, thanks to improving metal prices, renewed interest from institutional investors and years of cost cutting in the industry. In the past few weeks, a number of smaller deals have also come to market, including Ero Copper Corp., which raised $110.6-million and zinc company Titan Mining Corp., which raised slightly more than $50-million.

Meantime, Canadian steel maker Stelco Holdings Inc. is expected to go public soon and is targeting to raise about $200-million. A few weeks ago, The Globe and Mail reported that Clean TeQ Holdings Ltd. an Australia-based cobalt company, was considering a Toronto listing, but it has not announced definitive plans yet.

Unlike the Roots IPO, in which none of the funds raised went to the company, two-thirds of the proceeds raised by the Nexa IPO are going into its coffers. It is planning on using the funds to expand its mining operations in Peru and Brazil. Nexa currently produces around 650,000 tonnes of zinc equivalent a year but it is planning on expanding that to 800,000 tonnes within three years, according to Mr. Martins.

Shareholders who sold in the offering include Brazilian industrial conglomerate Votorantim SA, which is cutting its stake to 67.8 per cent, from 89.3 per cent, unloading about $159.6-million (U.S.) worth of stock.

A syndicate of 15 international investment banks made $24.8-million on a commission of 5 per cent for bringing Nexa to the public markets. The IPO was co-led by J.P. Morgan Securities LLC, BMO Nesbitt Burns Inc., Morgan Stanley Canada Ltd., and Credit Suisse Securities (Canada) Inc., according to the prospectus.

The days of double digit returns are over. Rob Carrick, personal finance columnist, lays out what you can expect given your investment risk profile.

The Globe and Mail

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:54pm EDT.

SymbolName% changeLast
ERO-T
Ero Copper Corp
+1.59%26.12
FNV-N
Franco Nev Corp
+1.59%119.16
FNV-T
Franco-Nevada Corp
+1.43%161.4
MS-N
Morgan Stanley
+0.71%94.16
NEXA-N
Nexa Resources S.A.
0%7.16
ROOT-T
Roots Corp
0%2.27
TI-T
Titan Mining Corp
0%0.3
TRI-N
Thomson Reuters Corp
-0.08%155.83
TRI-T
Thomson Reuters Corp
-0.41%210.8
X-T
TMX Group Ltd
-1.98%35.73

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