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Metals X Limited(ASX: MLX) successfully completed the fully underwritten capital raising for the implementation of various workstreams required to execute the companyâs Reset Plan at Nifty copper prospect. The company aims to achieve the 2 million tonnes per annum mining rates during March 2020 quarter.
The Equity Raising
Metals X announced the launch of an A$32.7 million equity raising, at A$0.15 a share, to strengthen the balance sheet and roll out the Reset Plan for the Nifty Copper Operations.
The Offer
On 19 September 2019, MLX announced that the A$32.7 million equity raising would be divided into two parts, which are as below:
- Institutional placement of A$15.5 million for approx. 103.4 million new shares (Placement).
- A one for six accelerated non-renounceable entitlement offer of A$17.2 million for approx. 114.8 million new shares (Entitlement Offer).
Metals X offered participation to both the institutional as well as the retail shareholders.
Placement and Institutional Entitlement Offer
The company invited the eligible institutional shareholders for the Placement and Institutional Entitlement Offer, conducted between 19 to 20 September 2019. The offering jurisdictions included ANZ (Australia & New Zealand), Canada (in which the selected jurisdictions were, British Columbia, Ontario, and Quebec), China, Hong Kong, Germany, Norway, Singapore, Switzerland, and the United kingdoms.
Retail Entitlement Offer
Metals X also mentioned that the eligible retail shareholders on the Record Date of 7:00 PM AEST (as on 23 September 2019) with retail addresses in ANZ, Hong Kong and China would be invited to take participation in the Retail Entitlement Offer at the issue price provided by the company in the Placement and Institutional Entitlement Offer.
Placement and Institutional Entitlement Offer Completion
The company successfully completed the Placement and Institutional Entitlement Offer, in turn, raised about A$24.6 million by way of the issue of approx. 164.28 million New Shares at A$0.15 a piece.
The total New Shares issue comprised of 103,359,076 shares for the placement and 60,922,130 New Shares for the Institutional Entitlement Offer.
The New Shares issued by the company will be ranked equally with the existing shares and would be allocated on 27 September 2019.
The key dates and events of the offer are as below:
The company released the Retail Entitlement offer booklet and anticipated the offer to raise about A$8.1 million via a one for six fully underwritten, non-renounceable offer.
Nifty Copper Operations
The Nifty Copper prospect of the company is a fly-in and fly-out operation with access provided via a sealed airstrip on site.
Metals X acquired the prospect from the Aditya Birla in late 2016 and the prospect contained substantial infrastructure in place with geological upside potential. The company acquired the prospect because of its poorly defined open resources and completed over 85,000m of drilling till 13 September 2019.
MLX is now focused on the rapid development of the new mining areas, which would progressively allow the company to increase the production rates at the prospect.
The drilling at the Nifty site increased the Ore Reserves by 65 per cent, which in turn, increases the resource confidence with additional Ore Reserves expansion opportunities.
As on 31 March 2019, the sulphite resources of the prospect stood at 36.28 million tonnes with an average grade of 1.10 per cent for a total of 63,100 tonnes of copper.
The prospect contains 23.43 million tonnes of Measured Resources, 7.12 million tonnes of Indicated Resources, and 5.73 tonnes of Inferred Resources.
To Know, how the Resources Play a significant role, Do Read: Smart Ways To Invest In A Commodity Stock
The total Ore Reserves of the prospect (as on 31 March 2019) stood at 11.10 million tonnes with an average grade of 1.45 per cent, which contains 161,200 tonnes of copper.
The Proved Ore Reserves of the prospect stands at 9.57 million tonnes, while the Probable Ore Reserves of the tenement is at 1.53 million tonnes (as on 31 March 2019).
Development of New Mining Areas
The company completed 2,940m drilling since May 2019 and 720m in July 2019 and is currently developing the western and eastern ends of Region 4 to provide stoping access on a priority basis. MLX is also developing the Region 5 to provide drilling access into the Northeast Limb.
The developed stocks currently stand at 1.4 million tonnes with an average grade of 1.46 per cent, which would contain 20,600 tonnes of copper, 78 per cent of which is outside of the Central Mining area.
The Reset Plan for which the company is securing the placement is outlined below:
As mentioned above, the goal of the Reset Plan Phase 1 is to reach a production rate of 2 million tonnes per annum by March 2020 quarter.
Nifty Outlook
The prospect of the company is on track to achieve the 2Mtpa mining rate; however, as per the company, the output in September 2019 would remain flat with improvement commencing in the December 2019 quarter.
The production outlook of the prospect is as below:
MLX Share Price Actions and Returns
Over the short-term, MLX is moving in a downtrend from the level of A$1.660 (high on July 2019) to the present low of A$0.140 (current low in September 2019).
However, on a daily basis, MLX recovered from the level of A$0.140 to the level of A$0.240 (Dayâs high on 13 September 2019).
Returns
MLX ON Charts
MLX Monthly Chart (Source: Thomson Reuters)
On a monthly chart, the stock made a bearish flag pattern and fell to the current levels of A$0.140. However, after recent months of consecutive falling, MLX rose in September and is currently holding the recovery levels.
MLX Monthly Chart (Source: Thomson Reuters)
On projecting the Fibonacci series on the monthly chart, we can notice that the primary hurdle for the prices remains at 61.8 per cent of the projected level, which is at A$0.347.
The trade volume in the stock is showing an increase against the previous month volume, which could suggest exhaustion of the downtrend, and consolidation at these levels could be anticipated. However, the major trend remains downward, and investors should wait and watch the price actions further to confirm the recovery phase, which would be confirmed once the prices breach the high of the candle marked as 2 on the chart shown above.
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