Africa’s Newest Gold Miner Starts Output and Sees Potential IPO

JOHANNESBURG (Capital Markets in Africa) – Toro Gold Ltd. became Africa’s newest gold producer last week when it delivered its first batch of bullion, and the privately held firm is now weighing the possibility of selling shares this year.

The company, which achieved the unusual feat of building a bullion mine without tapping public markets for funding, expects to produce about 135,000 ounces of the metal a year from the Mako project in Senegal. The mine was built ahead of schedule and came in below the $158 million budget.

Toro, which has been bankrolled by private equity investors including Resource Capital Funds and Tembo Capital, is now considering how best to deliver returns to those investors. With the firm proving it can produce gold and themetal trading near the highest since 2016, now might be a good time to sell shares, Chief Executive Officer Martin Horgan said in an interview.

“It’s the million dollar question; we’re in a good position,” Horgan, a former banker at Barclays Capital, said at the company’s London offices Monday. “Clearly there are conducive conditions right now. We could do it this year. We’ll sit down with the board and shareholders.”

A possible initial public offering could take place in London, Australia or Canada, the CEO said.

Toro, which reportedly considered an IPO in both 2016 and 2017, also has other options to pursue. It could remain private and pay dividends, or even be a target for another company, Horgan said. After bullion’s slump from a 2011 record, there has been a dearth of gold IPOs in recent years, with just three in London in the last four years, data compiled by Bloomberg show.

The Mako mine has an expected life of about eight years, though that could be extended as Toro completes more drilling. Cash costs at the project are about $750 an ounce, compared with a spot price of $1,346 now. The company is also looking for new projects in West Africa, including in Guinea and Ivory Coast.