Fresnillo IPO Review: Penoles Spinoff: Finance Trading Times

Fresnillo IPO Review: Penoles Spinoff

A new IPO is expected at the London stock exchange.
A transatlantic venture, because the IPO is from a Mexican firm.
Mexico's Industrias Penoles S.A.B. has decided to spin off its subsidiary business unit which takes care of the precious metals assets business with a new name called Fresnillo Group. Not only that, this new company for precious metals, now called Fresnillo Group, will be listing in the stock exchange which is known as the financial hub of Europe, the LSE or London Stock Exchange.

The Fresnillo Group IPO is expected in May this year.
Fresnillo, is mainly knows for being the largest primary silver producer of the world. Silver prices have shot up the roof last year, along with Gold prices. The company, Fresnillo Group, is said to have great valuations as it is estimated to be worth around $8 billion. With this kind of market capitalization, it is one of the front runners to be a part of the FTSE 100 index stock constituent.

Where will the Fresnillo Group IPO money raised be used?
Capital raised from the IPO or initial public offering of Fresnillo Group, which may be in the range of more than $900 million, will be used by Fresnillo to re-pay existing loans, debt and to fund business expansion plans.

How about Pre and Post IPO share holding pattern?
Penoles would continue to hold around 75% of the Fresnillo Group company shares post IPO. A Mexican Stock Exchange listed company, Penoles, says that the reason for spin off is that they would like to parent company Penoles to focus on base metals as well as its inorganic chemicals production business and the new company Fresnillo to cover precious metals business.

Along with Silver largest producer, Fresnillo, is also Mexico's second-largest gold producer. It has produced about 34.4 million ounces of silver and approximately 280,000 ounces of gold in 2007 and aims to double silver output within the next 10 years and increase its gold production.
The group owns three operating mines in Mexico: Fresnillo, the world's largest primary silver mine, and Cienega and Herradura, both primarily gold mines, as well as a pipeline of projects.
A further underground mine adjacent to the existing Fresnillo mine is planned and is expected to be a similar size to the existing Fresnillo mine. The company also anticipates starting production at Soledad and Dipolos, in which it holds a 56 percent stake, in 2009 and produce a peak rate of about 100,000 ounces of gold a year in 2010.
In addition to organic projects, Fresnillo is looking at joint ventures as well as continued exploration and acquisitions in Mexico and potentially elsewhere in Latin America.
In 2007, Fresnillo made a pretax profit of $161.0 million on sales of $647.9 million.
JPMorgan Cazenove Ltd. is sole bookrunner and broker for the IPO.
Fresnillo will also have a secondary listing on the Mexican Stock Exchange.

More and more IPO’s Let’s see how the Fresnillo Group IPO performs in these turbulent market timings. Table of Contents
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