29Metals’ $151m raising through Macquarie Capital and Jarden was larger than expected, but all of its largest shareholders have taken up their rights.
The raise on Wednesday at 69c, an 8 per cent discount to the last closing price of 75c, has been expected by analysts since at least May, as the company needs funds after flooding at its Capricorn Copper mine in North Queensland.
The question being asked around the market was why did the raise not occur earlier.
The funds are being used to strengthen 29Metals’ financial position, fully fund the Capricorn Copper recovery plan and near-term Golden Grove capital projects.
Sources said while the raise was large, 29Metals’ result on Wednesday showed it was not generating a lot of cash, adding that much of the funds will go towards Capricorn.
29Metals, which produces mostly zinc but also copper, is 45 per cent owned by private equity firm EMR Capital, which also took up its entitlement in the raise, amounting to $67.8m of new shares.
29Metals will have $31m of net cash after the raise, wiping out its $120m net debt position.
It has also received key covenant relief from lenders through to December 2024 to support the Capricorn recovery.
The company posted a $307m loss for the six months to June, with the result impacted by the wet weather that washed out the Capricorn Copper operations during the March quarter for an extended period.
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