Platinum Group Metals (PTM:TSX) is set to resume trading this morning after announcing yesterday that it would be completing a $175 million bought deal financing led by BMO Capital and GMP Securities. The stock has performed well this year, up over 50% YTD thanks to successful development of their Western Bushveld Joint Venture where they are completing the second phase of underground development and construction of the mill facilities. PTM will add the additional proceeds to the existing $80 million in cash they have to secure the equity portion of the capital funding programs at the Western Bushveld JV and the Waterburg JV, both in South Africa.
Although the equity markets in the resource sector have been historically weak as a whole, the right companies have been able to find equity this year. Barrick’s record breaking $3 billion bought deal (which was also co-led by GMP), Sulliden and Trevali both completed $40 million bought deals, Copper Mountain secured $30 million in a bought deal led by National Bank, even Colossus was able to secure $37.5 million from GMP and Dundee. The equity markets were even stronger on the oil and gas side with Africa Oil was able to close a $450 million broker financing which was one of the largest financings completed by a TSX Venture listed company. Bellatrix was able to secure $175 million in a bought deal this year, Whitecap Resources and Twin Butte were able to close $65 million and $70 million in bought deals, respectively.
So although, as a whole the equity markets remain frozen for resource companies, the right projects with the right management teams are still able to finance their projects. For the most part, these bought deal’s aren’t being done at deep discounts to market prices, meaning the banks clearly have confidence in the appetite of their buyers. There is clearly appetite out there for resource companies. If GMP, Barclays and RBC were able to sell $3 billion worth of one of the largest underperformers in the gold sector, then clearly buyer’s are still out there for companies in this sector.