Prospective investors in EMR Capital’s copper miner 29Metals are set to cross question the company this week as part of meetings for its initial public offering attempts to raise between $525.6 million to $609.1 million.
Should the company list, the float will be one of the largest to come to the market this year, and so far, fund managers say that the pricing appears to be reasonable, given that it is at a discount to major Australian listed copper miner OZ Minerals.
Private equity owner EMR Capital, which is headed by industry veteran Owen Hegarty, has been given a market value range of between $958 million to $1.1 billion.
Including debt, the business will be worth between $1 billion and $1.2 billion.
The valuation equates to between 4.9 and 5.6 times its forecast annual earnings before interest, tax, depreciation and amortisation for 2021.
A management roadshow is being held this week before a book build is held on Friday and the company is scheduled to list on Wednesday June 23.
Morgan Stanley, Macquarie Capital, Credit Suisse are working on the float along with co-lead manager Canaccord Genuity.
The selldown will result in $245 million of cash proceeds and new shareholders will own 55 per cent of the group.
If EMR opts not to list the business, it will instead probably sell only its Golden Grove mine to a trade buyer.
29Metals consists of the Golden Grove mine in Western Australia as well as the Capricorn copper mine in Queensland and regional tenement packages in Chile.
The listing comes after new records for the copper price were set at the beginning of May as base metals remain in strong demand in China, although the price came off the boil last week to about $US10,700 when it was down about 8 per cent from its record high on May 10.
The business generated $621 million of revenue in the 2020 financial year and $185 million of EBITDA.
Both Golden Grove and Capricorn Copper have been described as low-risk and high-grade, with mine lives of at least 12 years.
For 2021, the company is expected to produce about 67,000 tonnes of copper.
EMR has told investors it expects 29Metals to increase production by 50 per cent over five years and has low debt levels of 0.5 times its EBITDA for the 2020 financial year.
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