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.
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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.
