29Metals (ASX:29M) slips on biggest ASX mining debut in a decade

The newest copper player on the ASX has arrived…

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Australia’s largest mining initial public offering (IPO) in more than a decade is under way after 29Metals Limited (ASX: 29M) hit the boards of the Australian Securities Exchange at lunch.

At the time of writing, the newly listed copper producer is trading at $1.97 a share. This is down 1.5% from the company’s offer price of $2.

Upon listing, 29Metals joins the ranks of other ASX copper players such as Sandfire Resources Ltd (ASX: SFR) and OZ Minerals Ltd (ASX: OZL).

29Metals slides into ASX copper cathedral

Prior to going public, 29Metals raised approximately $527.8 million through its IPO offer. Shares were priced at $2 each, giving it an indicative market capitalisation of more than $960 million.

The well-timed debut follows a massive 56% surge in the commodity’s price over the last year. A rebound in the global economy paired with an acceleration in the ‘green transition’ has analysts at Goldman Sachs bullish on copper over the coming years.

According to the Australian Financial Review, Macquarie Capital and joint lead managers Credit Suisse and Morgan Stanley had the offer filled at $2.05. However, 29Metals’ owner EMR Capital was conscious of retaining a 45% holding. Because of this, EMR decided to pull the offer price down to $2 and offload a bit more to other institutional investors.

Let’s talk numbers

The miner’s portfolio of mining assets consists of Golden Grove (Western Australia), Capricorn Copper (Queensland), and Redhill (Chile). Between these, 29Metals produced 41,000 tonnes of copper in FY20. For comparison, Sandfire Resources produced 79,000 tonnes.

When including its production of gold, zinc, silver, and lead, 29Metals delivered a copper equivalent production of 87kt. As a result, the company achieved total statutory revenue of $434 million in FY20. Moreover, the board aims to increase production, in copper equivalent terms, by more than 50% over five years.

Based on the prospectus, forecasted statutory revenue for FY21 is $557 million.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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