29Metals initiates major capital raising strategy

29Metals (ASX:29M) has announced a significant capital raising initiative, targeting approximately $180 million through a fully underwritten institutional placement and an accelerated non-renounceable entitlement offer. The funds will deleverage the balance sheet, provide working capital, and finance the Gossan Valley development at the Golden Grove mine.

Overview and strategic outlook of 29Metals' financial announcement

29Metals has launched a fully underwritten institutional placement and accelerated non-renounceable entitlement offer to raise approximately $180 million. The capital raised will be directed towards reducing senior debt by $28 million and extending the maturity of senior facilities to 2028, with decreased repayments over the next two years. This financial strategy is crucial to supporting the Gossan Valley development at the Golden Grove mine, with the project promising a net present value of $110 million and an internal rate of return of 34%. The entitlement offer includes both institutional and retail components, with major shareholders such as AustralianSuper and BUMA committing to participate. The retail component, offering shares at $0.27 each, closes on 19 December 2024. The initiative, fully underwritten by Macquarie Capital (Australia) Limited and Jarden Australia Pty Limited, is not open to U.S. shareholders due to regulatory constraints. Through these efforts, 29Metals aims to strengthen its financial footing and enhance operational flexibility.

Executive insights on strategic financial moves

The proceeds from the equity raising will be used to reduce senior debt by $28 million and extend the maturity of senior facilities to 2028, with a reduction in repayments over the next two years. The development of the Gossan Valley project aims to enhance production flexibility at the Golden Grove mine and is supported by strong economic fundamentals, including a net present value (NPV) of $110 million and an internal rate of return (IRR) of 34%. Major shareholders, including AustralianSuper and BUMA, have committed to participating in the entitlement offer, with BUMA's increased investment resulting in a potential holding of up to 19.9% in 29Metals.