Trade buyers left in the dust for 29Metals assets as IPO beckons

EMR has been considering either a sale of its West Australian Golden Grove or a float with its Capricorn Copper mine as part of an entity called 29Metals. Picture: Bloomberg

Bids for EMR Capital’s Golden Grove copper mine were understood to have come in substantially below the price ascribed to the asset for an initial public offering, which is set to be priced on Friday.

EMR has been considering either a sale of its West Australian Golden Grove or a float with its Capricorn Copper mine as part of an entity called 29Metals.

29Metals is set to price its initial public offering on Friday after launching the book build on Thursday.

On Thursday, fund managers were told in a message that orders and indications received from institutional investors exceeded the base deal size.

Macquarie Capital, Credit Suisse and Morgan Stanley have been working on the June 23rd listing, while retail broker Canaccord Genuity had been brought in recently.

Shares are to be priced at between $2 and $2.40 each, equating to a market value of $958m to $1.1bn, or $1bn to $1.2bn including debt.

With respect to the Golden Grove trade sale, it is understood that two of the bidders competing for Golden Grove were South African-based Harmony Gold and Sandfire Resources.

Sandfire, advised by Citi, was considered the frontrunner in the auction but the understanding is that its bid came in far below the IPO valuation when the final offers were due on May 13.

Golden Grove is thought to account for about 80 per cent of 29Metals’ valuation.

Market participants have suggested that the IPO has been reasonably priced, given it is at a discount to the larger listed copper group Oz Minerals.

The valuation equates to between 4.9 and 5.6 times its forecast annual earnings before interest, tax, depreciation and amortisation for 2021.

The business generated $621 million of revenue in the 2020 financial year and $185 million of EBITDA.