Monsters of Rock: Ma, the rains are 'ere... to the despair of 29Metals

29Metals savaged after rain AGAIN shuts down Capricorn mine in Queensland
It comes just a month before a potential closure if it cannot get additional tailings storage capacity approved and virtually 12 months since a major suspension due to wet weather
Gold miners the silver lining as materials sector cops 0.8% loss

After copper miner 29Metals (ASX:29M) endured a year from hell in 2023, plenty of copper believers viewed the WA and Queensland base metals producer as a rope with plenty of slack to pull ahead of a looming copper supply crisis.

Only, supply issues are hitting 29Metals more than most.

After losing months of production at the Capricorn copper mine near Mt Isa last year due to flooding that saw shorter term suspensions at operations like Evolution Mining’s (ASX:EVN) Ernest Henry, the EMR Capital backed miner has had to shut down the operations AGAIN because of heavy rain.

Lightning, unfortunately in this case, does strike twice. 29M shares? Down a dramatic 25% today.

All too familiar for backers of the Owen Hegarty chaired company.

It’s hardly the sort of issue former BHP (ASX:BHP) executive James Palmer would like to deal with as he steps into the CEO’s role in May. What was going to be the upleg of the turnaround story will once again require a righting of the ship.

“The decision to suspend operations has not been taken lightly, particularly because of the impact it will have on our team at Capricorn Copper who have worked tirelessly following the extreme weather event in March 2023, as well as the local community, our contractors, and the businesses across the region and the state of Queensland that support the site,” outgoing CEO and MD Peter Albert said.

“Unfortunately, the combination of elevated water levels at the beginning of the wet season (as a result of the event a year ago) and the sustained rainfall since late January this year has more than offset our successes reducing water levels through mechanical evaporation and authorised releases of treated water within prescribed limits.

“The duration of the suspension will be dependent on a number of factors, including reducing the water levels held on site and securing the regulatory approvals required to set Capricorn Copper on a sustainable footing.

“29Metals’ objective will be to ensure the period of suspension is as short as possible. Planning for the restart will start almost immediately and we will use this pause in operations to build back stronger and set Capricorn Copper up for the future.

“During the suspension, 29Metals will continue to progress the growth potential at Capricorn Copper, including the targeted exploration activity currently underway to test the new mineralised zone identified last year east of the Mammoth orebody, and evaluation of the potential to produce a cobalt product.”

29Metals (ASX:29M) share price today

A rough couple years

29Metals was one of the ASX’s biggest non-coal mining floats in a decade when it listed in 2021 after raising $527.8m at $2 a share promising rare pure play copper exposure on the ASX.

It completed that IPO at a time when copper had just hit all time highs. The company paid its only dividend after its half-year result in 2022 before the Capricorn drama and mild copper pricing sent it into freefall.

29M had to raise a further $122m in an entitlement offer last year and had $162m in the bank as of December 31.

It expects to produce 18-22,000t copper, 54-61,000t zinc, 17-25,000oz gold and 700,000-1Moz of silver at the Golden Grove mine in WA’s Mid West in 2024. But it already had no guidance for Capricorn, with the mine’s tailings capacity set to be filled by the end of April this year.

The storm is another blow, with the $278m miner now trading at 40c, a fifth of its IPO price.

Albert said the new suspension would not have any impact on a disputed insurance claim relating to the 2023 weather event. It received $24m for damage to surface infrastructure but was told its policy does not apply to the underground loss and damage suffered at the mine.

And on the market

The rest of the ASX materials sector was not quite as poorly off as 29M, but copped a rough trading day, down 0.81% to 3.45pm AEDT.

Gold miners were the standouts, with Northern Star (ASX:NST) ip 1.6% and the gold sub-index rising 0.87% as the market waits for inflation data out of the US this week.

“A slew of reports this week are likely to offer more clarity on when central banks will start cutting interest rates,” ANZ’s Felix Ryan, Brian Martin and Daniel Hynes said.

“The Fed’s Lisa Cook said policymakers must take a cautious approach to allow more time for inflation to slow. However, Austan Goolsbee said he expects three rate cuts this year.”

Gold is fetching around US$2170/oz, just shy of recent record highs.