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

The newest copper player on the ASX has arrived…

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published July 2, 2021 1:52 pm AEST

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).

IPO graphic — Image source: Getty Images

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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