Financially failing, market paranoia, take over target or delayed gratification

23 May 2023: What 200 Olympic Pools of Water Means for 29Metals - YouTube

Plain Text: https://www.youtube.com/watch?v=qJeI95fvM68

That's the "Money of Mine" (MoM) Podcast boys covering the March 2023 massive flooding of 29M's Capricorn Copper Mine in Qld - and some of the implications or fallout from that for 29Metals - in their podcast today (23rd May 2023).

[Disclosure: I do not hold 29M shares.]

Old news but 29M fell on a negative operations update after a big run from takeover speculation (think it was the AFR)

Gold production to be upper guidance range.

Copper and Zinc production in lower guidance

More significantly mining, processing and G&A costs in upper guidance (ie: increased)

Another point is Golden Grove development has fallen behind as a result of labour pressures felt from COVID-19 during 2021/2022.

Was surprised they paid a dividend a few months back.

29 Metals continuing to perform poorly last couple of weeks and has now sunk below listing price ($2)

Might be due to poor base metal prices (highly leveraged towards copper with some Au, Zn and Ag credits)

Another clue would be also the number of shorts have gone up since entering the All Ords.

There was also an Ausbiz episode of the call maybe a few months ago where someone commented they thought the deposits were "average" despite being cashflow positive and thought Oz Minerals / BHP may be a better copper bet.

I don't know about that, but you can find some info in the latest presentation.

https://29metals.cdn.prismic.io/29metals/02e8d3d5-9ebd-4bc5-a84d-69cc7c42a908_20220615-HO-PRS-29M+Investor+Presentation_vFF+STRICTLY+CONFIDENTIAL.pdf

Capricorn Project (unfortunately quite far away from Cannington (South32) and Nil Desparadum/Lady Fanny discovery (Carnaby)

Golden Grove (WA). I was a bit surprised by how deep Golden Grove was and maybe should have thought about this before investing.

(from https://29metals.cdn.prismic.io/29metals/1193253c-afaf-4227-b7ac-671bf32c70c8_20220602-29M-CLSA+Australian+Exploration+Access+Day+Conference_vF.pdf)

[held]

FY2021 Full Year Financial Results

The results reported today comprise the statutory results for the Golden Grove Group for the six months to 30 June 2021 combined with the results for the post IPO 29 Metals Group for the six months ended 31 December 2021. 

* Revenue of $600.8 million (2020: $434.5 million), reflecting higher commodity prices and Capricorn Copper H2 revenue

* EBITDA3 of $177.3 million (2020: $155.5 million), reflecting higher revenues partly offset by higher cost of sales

* Operating cash flow of $75.1 million (2020: $130.6 million), reflecting higher revenues and improving operating performance, partly offset by higher costs of goods sold, transaction expenses and inventory movements

* Net Profit After Tax (‘NPAT’) of $121.0 million (2020: nil), including the impacts of the IPO transactions in 2021

* Adjusted Net Profit After Tax (‘Adjusted NPAT’)of $55.8 million (2020: $82.7 million),after adjusting for non-recurring restructure and IPO transactions impacts

* Net Drawn Debt of $3.5 million (2020: $112.6 million), comprising cash of $197 million and Drawn Debt of $201 million (US$150 million).

No dividend at the full year. 

A bit of background, 29 Metals is a copper/zinc producer that recently floated last year. Their main assets are Capricorn Copper in QLD and Golden Grove in WA and are both Tier 1 assets (+1MT contained copper equivalent).

Disc: Bought 21 February before the result after doing lots of research on Golden Grove and Capricorn Copper assets which was good timing. However, the big attraction is Golden Grove as their is optionality for additional mining fronts from further exploration.

Will try and write up a valuation on this later.