Is Ivanhoe Electric Inc. IPO a Good Investment?

• Undergirding recent political chaos in the U.S. and Russia’s invasion of Ukraine is a growing rejection of globalized interests, thus sparking greater emphasis on resource security.
• The upcoming new listing of mining firm Ivanhoe Electric is significant both for its deal size and its relevance toward the burgeoning electric vehicle (EV) industry.
• Although Ivanhoe’s entry into the public arena is encouraging, investors must also realize the frail circumstances the broader markets find themselves in.

Intertwined in the often-vitriolic discourse between the two major parties in the U.S. is a growing criticism (and even outright rejection) of globalization. Generally speaking, the American DNA embodies resilience and independence — two attributes diametrically opposed to an internationally integrated ecosystem. This undercurrent may be one of the unspoken yet essential catalysts for the possible success of Ivanhoe Electric Inc.

A resource mining firm, Ivanhoe Electric focused on the metals and minerals that bolster the technologies of tomorrow — copper, nickel, cobalt and others. With the rollout of EVs taking on even more significance amid the backdrop of Russia’s invasion of Ukraine, industrial metals command supreme pertinence. At the same time, where such commodities are sourced is another critical issue, which is where Ivanhoe enters front and center stage.

Focusing its attention on developing mines primarily located in the U.S., Ivanhoe ultimately seeks to foster supply chain independence — a crucial goal amid escalating geopolitical tensions. Nevertheless, while extraordinarily relevant, investors must carefully assess the pros and cons of this new listing before moving forward. Below are the key factors to consider.

What Does Ivanhoe Electric Do?

A minerals exploration and development firm, Ivanhoe Electric focuses on mining projects that will aid the electrification of transportation. Primarily, this ambitious target centers on metals such as copper, gold, silver, nickel, cobalt, vanadium and the platinum group metals (i.e., platinum, palladium, ruthenium, rhodium, osmium and iridium).

Naturally, the significance of this framework is the potential to rebalance the geopolitical equation in the favor of the U.S. and its allies. Currently, Russia and China produce a significant amount of resources that are central to the development of EVs. Indeed, one of the less appreciated undertones of the crisis in Ukraine is that the embattled nation enjoys potentially massive untapped lithium reserves.

Headquartered in Vancouver, Canada, Ivanhoe’s potential ability to tap North America’s resource base could help balance the scales of this implied cold war in critical minerals. As an added note, The Globe and Mail claims that Ivanhoe’s upcoming initial public offering (IPO) will be the first North American new listing in more than four weeks.

Below are some key advantages that the mining firm levers.

• Domestically geared: Although the rapid and unprecedented expansion of the real M2 money stock arguably represented the primary catalyst for inflation, Moscow’s military aggression toward Ukraine didn’t help. As promised, sanctions hit Russia, which in retaliation effectively shelved significant portions of global energy supplies, leading to more dollars chasing fewer units of energy. Bolstering domestic production of critical commodities could help eliminate seismic economic shocks.
• Big backing: Ivanhoe’s CEO is Robert Friedland, a 71-year old billionaire who amassed his extraordinary wealth through developing mines around the world. When Friedland speaks, people (with money) listen. Combining industry acumen with large financial backing, Ivanhoe is an IPO worthy of consideration among institutional investors and high-net-worth individuals.
• Indirect EV trade: Although EVs represent an exciting sector, the challenge from an investor’s perspective is recognizing which brands will succeed and which ones will flop. Invariably, not every direct competitor in the space can rise. However, Ivanhoe is more aligned as an infrastructural investment, meaning that it’s selling tickets to the game, not rooting for a particular score line.

Ivanhoe may benefit from political frustrations. With pain at the pump and in the grocery aisle, consumers are blaming the increasingly embattled Biden administration. Under this backdrop, Ivanhoe offers a logically compelling message: leverage the potentially untapped resources of the U.S. to save the American public.

When is the Ivanhoe Electric IPO Date?

One of the most anticipated entries into the IPO calendar in the year so far, Ivanhoe Electric presents a sharp contrast to the tepid offerings seen prior to it. Not only were IPOs few in number, but the private enterprises that dared to list their equity shares to public investors were also essentially nano-capitalization firms.

That won’t be the case with Ivanhoe Electric, which plans to raise $174 million through the distribution of 14.4 million shares. The expected price range is between $11.75 and $12.50. At the midpoint of this estimate spectrum, the mining firm will command a fully diluted market value of approximately $1.15 billion.

The expected IPO date for Ivanhoe is June 24, 2022. Shares will trade on the NYSE American exchange under the ticker symbol IE. Simultaneously, the company will list on the Toronto Stock Exchange (TSX) under the same ticker. Bank of Montreal (NYSE: BMO), Jefferies Financial Group Inc. (NYSE: JEF) and JPMorgan Chase & Co. (NYSE: JPM) represent the joint book runners for the deal.

Given that many of the recent new listings have been nano-cap plays — firms with market caps around or below $50 million — Ivanhoe’s public market debut is a much-needed boost of optimism. Understandably, because of the onerous weight of inflation, companies are hesitant to rock the boat. For instance, businesses that performed exceptionally well during the immediate post-COVID-19 cycle like Netflix Inc. (NASDAQ: NFLX) are now being forced to lay off their employees.

Here, Ivanhoe is expanding its footprint, thus swimming against the economic current. The bold decision can certainly inspire other companies to take a shot at going public. Of course, the advantage for IE stock specifically is that it commands the entire spotlight to itself.

Still, myriad risks exist, mainly stemming from the dangers of being a guinea pig. At present, the equities sector appears shaky, with the major indices down double digits on a year-to-date basis heading into Ivanhoe’s IPO. Also, with the Federal Reserve committed to combating inflation through raising the benchmark interest rate, an environment of ascending borrowing costs is not conducive for growth-oriented businesses.

What Analysts are Saying About Ivanhoe Electric IPO

Being one of the biggest IPOs this year along with its extraordinary relevance to the current geopolitical climate, Wall Street analysts will likely weigh in on IE stock in the weeks and months ahead. For now, the main bullish thesis centers on the viability of the copper market.

According to experts in the field, copper consumption by EVs is projected to be over 4,800 kilotons (kt) by 2040. In contrast, electric-powered vehicles consumed approximately 500 kt of copper last year or a magnitude differential of 860%. And that’s not including other sources of copper consumption, which could increase from the rising global population. Therefore, Ivanhoe is poised to be a sector leader should its developmental ambitions pan out.

Another factor to consider regarding IE stock is the underlying domestic footprint. Ivanhoe features two material mineral projects, the Santa Cruz Copper Project in Arizona and the Tintic Copper-Gold Project in Utah. From pandemics to open warfare, Americans have suddenly experienced the darker side of globalization: painful vulnerabilities when previously garnered relationships and alliances fail. Fortifying critical resource supply chains could go a long way toward easing economic burdens for American citizens.

Still, no IPO is without downside risks. Primarily, the mining sector is one of the most vulnerable in the markets. Should a recession capsize the economy, IE stock may lose much of its luster. In addition, there’s no guarantee that EVs will take over the broader transportation network. For instance, charging infrastructure remains a significant roadblock to mainstream integration.

Ivanhoe Electric Financial History

Although much fanfare surrounds the public market debut of Ivanhoe Electric, prospective investors will be absorbing significant risks since the business is largely aspirational. In the year ended March 31, 2022, Ivanhoe booked $10 million in revenue. It’s a small tally for a company valued at $1.15 billion and that’s because the underlying mining projects are still in the exploration phase and have not yet generated revenue.

Instead, Ivanhoe has depended on two sales channels: one from the ownership of a data-processing firm catering to the oil and natural gas industry and another from the development of vanadium-flow batteries. Nevertheless, the core mining business has to come through for Ivanhoe. Otherwise, it could be a long day for investors.

Ivanhoe Electric Potential

Considering the context of the new normal, Ivanhoe’s IPO is incredibly relevant as it may help fortify resource-based supply chains. With geopolitical tensions escalating, there’s never been a more important time to be resilient.

Still, the current context also poses challenges because of looming recession fears. Should the economy tumble badly, Ivanhoe’s relevance could end up becoming a moot point.

Where to Buy Ivanhoe Electric IPO Stock

If you want to participate in Ivanhoe Electric’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of best brokers to consider.

IE Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

IE Pre-IPO

Unfortunately, no pre-IPO access is available for IE stock. However, those interested in early bird opportunities should consider opening an account with Freedom Finance.