29Metals share price sinks 10% after miner taps investors for $122 million

The institutional component of the miner's capital raising announced this week achieved a 97% take-up rate.

| More on:
People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The 29Metals Ltd (ASX: 29M) share price is on a rollercoaster this week.

On Friday, the ASX mining stock sank 10.2% to 79 cents per share amid no news from the company today. Near the close of trade, shares were down 6% at 83 cents.

This follows a 20.35% surge yesterday after the company announced it had completed an institutional capital raise at an offer price of 69 cents per share.

The 29Metals share price closed yesterday's session at 88 cents.

Why is 29Metals raising funds?

As part of this week's share price rollercoaster, 29Metals went into a trading halt at 75 cents per share on Wednesday. The company then released its FY23 half-year results and the equity raising details.

29Metals is seeking to raise a total of $151 million via institutional and retail entitlement offers.

In an announcement yesterday, 29Metals revealed it had raised $122 million from institutional investors.

This included $67.8 million from the miner's biggest shareholder, EMR Capital Investors, which has a 44.85% interest.

The company said eligible existing institutional shareholders subscribed for approximately 97% of their entitlements.

CEO of 29Metals, Peter Albert, said:

We are very pleased with the level of support shown by our existing shareholders for the Institutional
Entitlement Offer and the strong interest shown by other prospective institutional investors.

The strong demand from existing shareholders has resulted in New Shares only being allocated to existing shareholders.

The retail entitlement offer opens on Wednesday, 6 September.

Investors can review the company's capital raising presentation here.

How will 29Metals use the new funds?

29Metals will use the funds raised to strengthen and de-risk its balance sheet and fully fund the Capricorn Copper Recovery Plan and near-term Golden Grove capital projects.

The offer price represents an 8% discount to Tuesday's closing 29Metals share price of 75 cents.

Citi downgrades 29Metals share price target

Following 29Metals' half-year report, top broker Citi has cut its 12-month share price target on 29Metals from 85 cents to 75 cents.

In its half-year results, the miner reported a net $307 million loss for 1H FY23 compared to a $400,000 profit in 1H FY22.

Earnings fell significantly due to halted production at the Capricorn Copper project and the resultant non-cash impairment charges of $206 million.

29Metals suspended operations at the mine in March due to extreme rainfall.

This caused various damage, cut off road access to the site, and created major water management dramas.

For the six months ended 30 June, copper production came in at 10kt compared to 20.5kt in 1H FY22. Zinc production in 1H FY23 was 22.1kt compared to 23kt in 1H FY22.

On 1 August, 29Metals announced the project was finally back up and running. The 29Metals share price spiked 12.5% on the day of the news.

Not surprisingly, 29M Metals will not be paying an interim dividend to shareholders this earnings season.

29Metals share price snapshot

This ASX mining stock has tumbled 57% in the year to date.

Motley Fool contributor Bronwyn Allen 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 Scott Phillips.

More on Capital Raising

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Consumer Staples & Discretionary Shares

Why is this ASX share crashing 60% on Monday?

Shareholders of this stock may need a stiff drink today.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Why is this ASX lithium stock crashing 16% today?

Why is this stock having such a poor start to the week?

Read more »

happy investor, celebrating investor, good news, share price rise, up, increase
Capital Raising

Nick Scali share price jumps 14% to record high after raising $46m

Investors have responded very positively to the company's UK expansion plan.

Read more »

a man in a british union jack T shirt hurdles high into the air with london bridge visible in the background.
Mergers & Acquisitions

Nick Scali shares halted amid $60m capital raising and UK expansion news

This furniture retailer has its eyes on the UK furniture market.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

DroneShield shares freeze on $75 million for AI and inventory

This defence tech stock is rattling the can for a chunk of cash.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

What's happening with the NextDC share price on Thursday?

NextDC is raising $1.32 billion to accelerate its data centre developments amid the rapid growth of AI.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

Up 102% in 2024, here's why this ASX All Ords stock is now frozen

Seize the day. This company is ready to cash in on its renewed image.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why is this ASX 300 battery materials stock crashing 20% today?

Its shares are now down by 67% since this time last year.

Read more »