In today’s briefing:
- MMG (1208 HK) – $1.1bn+ Rights Offering – Expect Regular Rights Trading Dynamics
- MMG (1208 HK): US$1.2bn Highly Dilutive Rights Issue
- Northern Minerals (NMI AU): Chinese Investors Forced To Exit
- MMG Limited’s Rights Issue (1208.HK)
- ConocoPhillips/Marathon Oil and Shale Consolidation
- Omai Gold Mines Corp – Mining Monthly: May Edition
MMG (1208 HK) – $1.1bn+ Rights Offering – Expect Regular Rights Trading Dynamics
- Mmg Ltd (1208 HK) today announced a 2:5 Rights Offering to raise US$1.15bn at HK$2.62/share in order to pay down debt from their recent Botswanan copper mine acquisition.
- It was a sizeable acquisition, and the near-term EV/EBITDA of the acquisition is 10x or above. The longer-term EV/EBITDA is in the 3s based on expansion later this decade.
- The Rights Offering is underwritten, supported by its 67.5% owner. SOUTHBOUND holds 10+%. There are short dynamics, arb dynamics, “don’t wanna spend more” dynamics. There’s a path here.
MMG (1208 HK): US$1.2bn Highly Dilutive Rights Issue
- Mmg Ltd (1208 HK) will raise HK$9.1bn (US$1.2bn) through 2 rights shares for every 5 existing shares rights offering. The rights price is HK$2.62, a 24.7% discount to the TERP.
- The rights proceeds will be used to repay existing debt, which will allow it to use other funds to better support the ongoing development of the operating mines.
- MMG shares should continue to decline heading into the ex-rights date. The shares go ex-rights on 11 June, and the rights start trading from 24 June to 2 July (inclusive).
Northern Minerals (NMI AU): Chinese Investors Forced To Exit
- Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
- On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
- The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days.
MMG Limited’s Rights Issue (1208.HK)
- Short term overhang from expanded share count and selling from unwilling participants
- The copper supply and demand story is intact and the fundamentals of the company remain strong
- Parent’s uptake of the rights is positive but the stock will take time to build a base for the next leg up
ConocoPhillips/Marathon Oil and Shale Consolidation
- Conocophillips is set to acquire Marathon Oil in an all-stock deal (0.2550 COP US per 1 MRO US) valued at $22.5 billion ($30.33/share), including $5,379 million in net debt.
- Most of the frenzy in the US oil industry has focused on the consolidation within the Permian Basin, a maturing region that offers opportunities to reduce costs and increase profitability.
- The acquisition of Marathon will add highly complementary acreage to ConocoPhillips’ existing U.S. onshore portfolio. Spread as of 4 June is 2.6%/4.7% (gross/annualised, assuming settlement by late Q4).
Omai Gold Mines Corp – Mining Monthly: May Edition
- May was silver’s time to shine, hitting 12-year highs up 13.7% on the month, significantly outperforming gold and other metals.
- The silver equities also followed suit, up 13.4%.
- Gold and copper posted smaller gains, despite both metals setting all-time highs mid-month, closing up 0.2% and 1.7%, respectively.
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