Why are FireFly Metals shares pulling back from near-record levels today?

FireFly Metals shares have come off their record highs after a major capital raise to drive exploration was announced.

| More on:

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

Key points
  • FireFly Metals has raised $139 million to fast-track drilling at its Canadian copper gold project.
  • The company will deploy nine drill rigs on the new campaign.
  • The next step will be progressing towards a final investment decision.

Shares in FireFly Metals Ltd (ASX: FFM) took a tumble on Thursday after the company said it had completed a $139 million capital raise to progress its flagship Canadian copper and gold project.

The company's shares hit a record high of $1.98 on Monday before the company's shares went into a trading halt on Tuesday.

The shares have tripled over the past year from levels as low as 66.5 cents, but took a step down on Thursday to be changing hands for $1.79, down 7.9%.

This was after the company announced it had raised $143 million from an institutional capital raise at $1.70 per share.

Existing shareholders in the company will also be able to take up new shares to the value of $5 million at the $1.70 offer price.

Young successful engineer, with blueprints, notepad, and digital tablet, observing the project implementation on construction site and in mine.

Image source: Getty Images

Funds to drive growth

FireFly stated in a release to the ASX that the money will be used to expand and upgrade the mineral resource at its Green Bay copper and gold project in Newfoundland, Canada, in preparation for a final investment decision.

FireFly managing director Steve Parsons said the company could now forge ahead with its growth plans.

This highly successful raising means we can embark on a no-holds-barred drilling campaign aimed at creating further shareholder value in a very timely manner. We will increase the drilling fleet to nine rigs as part of an aggressive onslaught targeting extensions to known mineralisation and new regional prospects. We are also progressing towards a final investment decision by derisking the Green Bay copper-gold project by embarking on upscaled mining studies which are expected to be completed in the first half of CY26. "The name of the game at Green Bay is clearly drive value through the drill bit and derisk a large-scale copper-gold project. So that's exactly what we are going to do.

The Green Bay project is made up of multiple assets, with the flagship being the Ming underground mine.

It also includes regional exploration assets, access to a port, and a processing facility.

The Ming mine, according to the FireFly website, was originally mined from 1972 to 1982, before restarting in 2012. It was then mined through to 2023 before being mothballed once again.

As the company explained:

The Ming Mine consists of a fully operational decline accessible to 950m below surface, and an existing 650m deep shaft. This functional infrastructure provides a significant platform for FireFly to rapidly increase the Mineral Resource for minimal capital outlay and set the Company up for future mining operations.

FireFly was valued at $1.32 billion at the close of trade on Monday, before the capital raise was announced.

Motley Fool contributor Cameron England 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 Resources Shares

Worker on a laptop in front of an energy storage system in a factory.
Resources Shares

Up 72% in a year, Monadelphous just scored another win

It’s another win for the ASX 200 company that continues to consistently outperform expectations.

Read more »

Happy miner with his hand in the air.
Resources Shares

Buying Rio Tinto shares? Here's the yield you'll get today

Rio has been a goldmine for investors lately.

Read more »

two businessmen shake hands in a close up mid-level shot with other businesspeople looking on approvingly in the background.
Resources Shares

Monadelphous wins $120m in new contracts across mining and renewables

Monadelphous Group has landed $120 million in new construction and maintenance contracts across the resources and renewable energy sectors.

Read more »

Pile of copper pipes.
Resources Shares

Shares in these 2 ASX copper companies are charging higher after a new deal was announced

This agreement looks like a win-win at this stage.

Read more »

Two workers working with a large copper coil in a factory.
Resources Shares

With an "extreme" copper crunch coming, here are 2 shares to buy

Pitt Street Research has picked some potential winners.

Read more »

CEO leading a board meeting.
Resources Shares

Northern Star Resources announces CEO succession plan

Northern Star Resources has announced Managing Director Stuart Tonkin will step down in FY27 after leading major expansion.

Read more »

Young woman reviewing financial reports at desk with multiple computer screens.
Resources Shares

BHP shares vs Rio Tinto shares: Which miner looks better?

Both miners can generate huge cash flow, but I prefer the one with the stronger long-term commodity mix.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Resources Shares

3 reasons why the BHP share price could be a buy

BHP is an incredible operator that’s worth owning for the long-term.

Read more »