Franco-Nevada IPO gets go-ahead

ANDY HOFFMAN

Globe and Mail Update

November 20, 2007 at 9:26 PM EST

The biggest stock debut on the Toronto Stock Exchange so far this year was given the green light Tuesday, setting the stage for the billion-dollar rebirth of Franco-Nevada, the Canadian gold and energy royalty company sold to Newmont Mining Corp. in 2002.

Executives at Denver-based Newmont decided Tuesday morning in favour of a plan that would see the resource royalty assets bundled together in a company called Franco-Nevada Corp. that will launch an initial public share offering on the TSX. The new company is expected to be valued at between $1.2-billion and $1.3-billion, according to sources familiar with the matter.

The offering, which comes amid a boom in metals prices and the loss of major Canadian mining names such as Alcan, Inco and Falconbridge is expected to be priced within the next two weeks and begin trading in December.

Franco will hold royalties or equity interests in 190 gold, precious and base metals and mining properties including Barrick Gold Corp.'s Goldstrike mine in Nevada and the Stillwater platinum and palladium complex in Montana.

The company will also hold more than 100 royalty or working interests in oil and gas properties including assets in Western Canada operated by companies including EnCana Corp., Talisman Energy Inc., Canadian Natural Resources Ltd. and Petro-Canada.

David Harquail, a former Newmont vice-president and an ex-employee at the old Franco-Nevada Mining Corp., will serve as chief executive officer of the new company.

Pierre Lassonde, a Canadian industry veteran who along with long-time business partner Seymour Schulich sold the old Franco to Newmont in 2002 as part of a $4.2-billion (U.S.) blockbuster three-way merger in 2002, will serve as chairman.

“The IPO of Franco-Nevada will allow investors the opportunity to participate in what we believe to be one of the largest holdings of precious metal and resource royalties in a publicly listed company,” Mr. Lassonde said in a statement.

Newmont had announced plans to shed its royalty holdings in July as part of a restructuring under new president and CEO Richard O'Brien. In a statement, Mr. O'Brien said Newmont intends to use the proceeds to invest in its core gold business.

The planned IPO had been competing head to head against a scheme to sell the assets to strategic buyers. The so-called dual-track process, was “very competitive and very close,” according to Newmont spokesman Omar Jabara.