ASX mining stock 29Metals Ltd (ASX: 29M) went into a trading halt before the miner announced its FY23 half-year results and news of a capital raise this morning.
The ASX mining stock is currently frozen at 75 cents per share.
Meantime, the company reported a net $307 million loss for 1H FY23.
Let's look into the details.
ASX mining stock frozen amid capital raise news
First up, let's take a look at the key points in this ASX mining stock's half-year report.
For the six months ended 30 June:
- Copper production 10kt (1H FY22: 20.5kt)
- Zinc production 22.1kt (1H FY22: 23kt)
- Revenue of $235 million (1H FY22: $356 million)
- Earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss of $27 million (1H FY22: $94 million)
- Operating cash outflow of $25 million (1H FY22: $109 million inflow)
- Net loss after tax (NLAT) of $307 million (1H FY22: $400,000 net profit after tax (NPAT))
- Cash and equivalents of $127 million as at 30 June (31 December 2022: $172 million)
- Net drawn debt of $120 million as at 30 June (31 December 2022: $26 million)
- No interim dividend
What else happened in 1H FY23?
Extreme rainfall at the company's Capricorn Copper project in March led to the suspension of operations.
The company's announcement of the suspension on 9 March sent the ASX mining stock down 4.55%.
More than 200mm of rain bucketed down during the evening of 7 March, which cut off access to the site by road. This delayed deliveries of production consumables to the site.
It also led to a substantial increase in the volume of water on the site, which has presented longstanding water management challenges.
Abnormally high rainfall during the whole season has also contributed to this problem.
On 1 August, 29Metals announced the project was back up and running. Mining has resumed at Mammoth and Greenstone, and mineral processing operations have also restarted.
The ASX mining stock rose by 12.5% on the day of the news.
The company explained that its 1H FY23 net loss included non-cash impairment charges of $206 million relating to the Capricorn Copper cash-generating unit, asset damage or loss at the site, and inventory write-downs.
What did 29Metals management say?
Managing director CEO Peter Albert said:
Looking ahead, we remain focussed on executing our plans to deliver positive improvements for both operations in the second half.
Whilst today's result is not what we hoped for, we are confident that the progress made in the first half, under extremely challenging circumstances, sets the Company on the path to delivering its potential.
What's next for this ASX mining stock?
What's next is a $151 million capital raising, with new 29Metals shares to be offered at 69 cents per share.
The fully underwritten 1 for 2.2 accelerated pro-rata non-renounceable entitlement offer will have institutional and retail components.
Funds raised will be used to strengthen and de-risk 29Metals' balance sheet and fully fund the Capricorn Copper Recovery Plan and near-term Golden Grove capital projects.
The biggest shareholder in this ASX mining stock is EMR Capital Investors. It has a 44.85% interest in 29Metals and is fully supportive of the capital raise, according to the miner.
EMR Capital has committed to taking up its entitlement of $67.8 million worth of new 29M shares.
The offer price represents an 8% discount to the last closing price of 75 cents per share.
Investors in this ASX mining stock can review the company's capital raising presentation here.
The company requested that the trading halt remain in place until it announced the outcome of the institutional component of the entitlement offer, or until the commencement of trading on Friday (whichever comes first).
29Metals share price snapshot
The ASX mining stock has tumbled 61% in the year to date.
