Ivanplats, the mine developer founded by billionaire Robert Friedland, is the worst performer among its global peers this year. Analysts say its stock should be almost three times higher.

Ivanplats has dropped 69% this year in Toronto, the most among 115 companies in a Bloomberg mining index, which has fallen 30%.

The Vancouver-based company’s capital expenditure needs, the geopolitical risk inherent in its African projects and the general doldrums in the global mining industry have spurred the decline, says John Goldsmith, deputy head of equities with Montrusco Bolton Investments, in Toronto.

“The big issue with them right now is they do have a substantial amount of capex requirements,” says Goldsmith, whose company manages C$5.5-billion ($5.3-billion). The riskiness of operating in Africa also is being factored into the way the shares are valued, he adds.

Five analysts who rate the company have an average target price of C$4.19, almost triple Ivanplats’ closing price of C$1.54 a share last Thursday, and the biggest spread in the Bloomberg World Mining Index. Six analysts rate the stock a buy, two have the equivalent of hold, and none recommend selling, according to data compiled by Bloomberg.

“Ivanplats is optimistic that the value of the company’s projects will be more broadly recognised as the company continues to make good progress in advancing its three principal projects in South Africa and the Democratic Republic of Congo (DRC),” the company says.

It also notes that Ivanplats’ shares only began trading out of step with its peers in the S&P/TSX Global Mining Index in late April, about the time that lock-ups related to its initial public offering last year started to expire.

“Ivanplats has the potential to realise significant value as it advances its three main projects through development and into production over the next five years,” says Fraser Phillips, a Toronto-based Royal Bank of Canada analyst with a buy rating.

Each of the company’s “world class” projects has the potential to be “one of the largest mines in terms of production in their respective metals,” says Alex Terentiew, a Toronto-based analyst at Raymond James. Ivanplats is evaluating copper, zinc and platinum group metals projects in the DRC and South Africa, the company says on its website.

Ivanplats has an experienced management and board that can advance the company’s projects to the point at which market confidence is boosted, leading to a “significant appreciation” in the company’s value, Terentiew says.

Friedland, 62, Ivanplats’ chairperson, has succeeded in the past with large deposits. His most recent promotion was Ivanhoe Mines, now renamed Turquoise Hill Resources, the owner of 66% of the Oyu Tolgoi copper and gold project, in Mongolia.

Friedland has been advancing mine projects for more than two decades and led the C$4.3-billion sale of the Voisey’s Bay nickel deposit in Canada in 1996, according to the Ivanplats’ initial public offering (IPO) prospectus.

Friedland has shown that he is able to raise the money for big projects, says Frank Holmes, CEO of US-based Global Investors, which oversees $1.3-billion in assets, including Ivanplats shares.

“I’ve bought some more on the down days because it will have its day,” says Holmes. “It’s Robert Friedland and he’s a visionary and he’s relentless.”

Ivanplats’ C$300.8-million IPO last October was the biggest Canadian mining IPO since Tahoe Resources raised C$348-million in 2010. Ivanplats has been the worst-performing IPO bigger than $100-million globally in the past 12 months, according to data compiled by Bloomberg.

Copper has fallen 14% in New York since October 17, the date of the Ivanplats offering, while platinum has dropped 14%. Over the same period, the Standard & Poor’s/TSX Materials Index has declined 33%.

Ivanplats’ Kamoa copper project, in the DRC, may produce at least 143 000 t (315-million pounds) of copper annually in its first ten years of operations, according to a May 15 statement. It is the world’s biggest undeveloped high-grade copper discovery, Ivanplats says.

The company owns 95% of the project and the DRC government holds the balance. Ivanplats has offered to sell another 15% to the DRC government, according to the company’s website. It also said in April it was in “detailed discussions” with major international mining industry participants for financing and developing the project and associated infrastructure.

Ivanplats also is studying developing Kipushi, a base metals mine in the DRC that has operated on and off since 1924, and is evaluating the Platreef platinum group metals discovery in South Africa.

Concerns around Ivanplats are “the insufficient installed power capacity, the political risk of higher taxes, royalties or asset expropriation, and the need to raise over $4-billion to bring these projects into production,” according to Terentiew.

The decline in Ivanplats’ shares makes equity financings difficult, says Goldsmith, whose company has a policy of only investing in mine developers within a half year of starting production. The geopolitical risk will also be an issue for Ivanplats, he says.

“Because of where it’s located, it’s never going to fetch premium valuation,” Goldsmith says. “It is what it is: great asset, wrong location, [and this] means you don’t get premium price.”