Monsters of Rock: Cash is flying in for small copper producers today

Cyprium and AIC Mines raise collective $65 million to boost Aussie copper production
DDH1 posts strong first half figures ahead of results season
Materials up 0.32% as Newcrest lifts on Newmont offer

All eyes are on Newcrest Mining (ASX:NCM) and the decision its board has to make on whether to give the tick of approval to Newmont’s $24 billion scrip bid for Australia’s biggest gold mine.

But plenty of other news is kicking about in the listed producer space.

One understated story across the ASX today is the money piling into ASX copper stocks, who are rushing to create and junior and mid-tier market for the EV metal.

While copper prices are running pretty hot in 2023, up 10% in January to over US$9000/t, the impending swallowing of reliable dividend payer OZ Minerals (ASX:OZL) by supermajor BHP (ASX:BHP) will leave a hole for most ASX copper investors if independent experts back the bid and its shareholders vote up the offer.

Next cabs of the rank 29Metals (ASX:29M) and Sandfire Resources (ASX:SFR) have posted indifferent performances in recent months, beset by production or cost issues.

Could a couple of cheap, under the radar copper miners provide value?

That is certainly the hope…

For investors who plowed cash into capital raisings today they sure do hope so.

$190 million capped AIC Mines (ASX:A1M) announced a $30 million equity raising today, planned to boost its cash balance to almost $50 million.

The miner, which currently produces around 12,500t of copper and 6000oz of gold per annum from its Eloise mine near Cloncurry in Queensland, has tapped Argonaut and Shaw and Partners for the raising at 45c, an 8.2% discount to its last closing price of 49c a share.

The cash, which will boost its pro-forma market cap to $226.5m, will be used on studies to develop the Jericho deposit, acquired in A1M’s acquisition of Demetallica last year, and expand the Eloise processing plant from 750,000tpa to between 1-1.4Mtpa.

A comparison with similar studies has indicated costs to complete the Jericho box-cut and decline of around $30-35m, with $20-25m likely to be needed for the Eloise plant expansion with a construction timeframe of around 12 months.

The aim is to ramp production up to more than 20,000tpa of copper and 10,000ozpa of gold.

Over the other side of the country Cyprium Metals (ASX:CYM) is hoping to revive the long troubled Nifty copper mine in WA.

Discovered originally by WMC in WA’s Pilbara, India’s Aditya Birla and ASX-listed Metals X (ASX:MLX) have both failed to make Nifty a money spinner. But in a higher copper price environment Cyprium are hoping to realise the mine’s potential.

Their shares fell 16% after taking an 18.5% discount on the $35 million raising led by Canaccord Genuity, Euroz Hartleys and Evolution Capital.

Around $20m from the placement will be put towards financing the restart of the Nifty project, which is expected to produce around 25,000t of copper metal a year.

Cyprium says the net proceeds from a a bond issue as well as a US$35m prepayment facility announced last December comprise a targeted $240-260m debt funding package to finance the restart of the mine. It is aiming a H1 2024 restart.

“We would like to thank the existing and incoming Cyprium shareholders for their support in this well supported capital raise. The commitments received for this Placement form part of the finance package for the restart of the Nifty Copper Project,” managing director Barry Cahill said.

“The completion of the capital raising, which is conditional with the finalisation of the senior debt financing will allow Cyprium to commence our construction plans and the production of copper metal plate on site in the first half of 2024.

“The restart project economics remain very robust and are further enhanced based on current copper prices of AUD13,000 per tonne which is above those applied in the Nifty Copper Project Restart Study.”

The first phase of the mine is intended to run for 6.3 years at a capex of $134m, $277m NOV, 37% IRR and three year payback period at C1 cash costs of US$1.91/lb.

Cyprium Metals (ASX:CYM) and AIC Mines (ASX:A1M) share price today:

DDH1 boasts ‘record’ half year results

Over in the mining services space DDH1 (ASX:DDH) has prepped investors for its half year results with unaudited revenue and earnings for the first half of FY23 up 15.7% and 15.9% on 2022 levels.

The drilling services provider posted six month revenues of $286m, with revenue per rig up 6.3% to $1.53m and revenue per shift up 7.1% to $5910.

That underpinned operating EBITDA of $65.6m and statutory EBITDA of $43.8m, with cash generation rising over 50% from $40.2m in the first half of FY22 to $62.2m in the six months to December 31 last year.

“Demand for our Company’s specialised services from mine producers and explorers continued at high levels across our four brands – DDH1 Drilling, Ranger Drilling, Strike Drilling and Swick Mining Services. This was reflected in our metres drilled at 1.8m (million) metres for 1H23,” DDH1 MD and CEO Sy van Dyk said.

“We achieved record 1H23 results, notwithstanding elevated underlying costs, due to inflationary pressure.

“Pleasingly, these costs are starting to moderate and we are making meaningful rate increases as contract renewals roll over. Our EBITDA margins remain strong.

“Protecting our people and maintaining our best-in-class fleet remain key focus areas. Importantly, our TRIFR improved 8.9% during the period and we advanced a number of our development projects for hands free operation and further rig automation.

“Concurrently, we undertook additional trials with our e-rig, which aims to reduce the carbon footprint of underground core drilling operations by 50%.”

DDH1 (ASX:DDH) share price today:

The materials sector finished the day up 0.32%, powered by a 9.27% lift for Newcrest after the reveal of the Newmont bid.

Energy stocks, led by coal miners Whitehaven (ASX:WHC), New Hope (ASX:NHC) and Yancoal (ASX:YAL) also rose 0.92%.

The big iron ore miners started the day off well, but fell to sub-1% gains as iron ore futures fell in Singapore and Dalian.

Meanwhile, Gina Rinehart’s Hancock Energy secured a majority stake in gas play Warrego (ASX:WGO), bounding past 40% acceptances against competition from Warrego’s JV partner Strike Energy (ASX:STX).

That will see the offer price lift from 28c to 36c a share, with additional commitments in the bid’s acceptance facility taking Hancock to over 50%, making it Warrego’s controlling shareholder.