• 29 Metals shares have been savaged for a second straight day after the closure of its Capricorn copper mine due to wet weather
  • Lithium plays muted in response to Albemarle auction result
  • Miners up 0.18% on indifferent day

 

29Metals (ASX:29M) shares have gone into freefall, crumbling by another 9.5% a day after a 25% wipeout for the $250m capped copper miner yesterday.

If you’re not familiar with the situation, the circumstances of 29M’s despair are not dissimilar to those of contestants on the Japanese inspired gameshow Wipeout from a few years back … too much water.

The Capricorn copper mine has flooded for the second time in a year, prompting another downgrade for a stock previously running higher on recovering copper prices.

The shutdown could be a blessing of sorts, RBC analysts said in a note today, given 29M has been lossmaking at the operation now for three quarters.

But it has prompted a downgrade of its price target on the stock from 65c to 50c. 29M is currently trading at 36c, a fraction of the $2 issue price in its $527m IPO in 2021.

“As Capricorn has been loss-making for the last three quarters, suspending the operation may actually preserve the balance sheet near-term, given that C&M costs are a fraction of the restart and operating costs that were being incurred,” RBC’s Paul Wiggers de Vries, Kaan Peker and Alex Barkley said.

“Further, the near-term preservation of the balance sheet may remove some of the capital raise overhang from the stock until certainty on Capricorn path to recovery is provided.”

To be fair to 29M, which is still disputing the quantum of an insurance payout on last year’s rain debacle, it had already flagged the likely cessation of mining activities from the end of next month, when its tailing storage ran out. New approvals are needed to store its waste.

RBC thinks it will take around 13 months to get the mine back online.

“Our expectation is that operations at Capricorn will be shut down from April 2024 to April 2025, with Greenstone and Mammoth restarting in the April Quarter of 2025,” Wiggers de Vries and his colleagues wrote.

“Due to the ongoing water issues, we do not expect Esperanza South to restart until CY26.

“Given the shutdown, we have removed all associated capital and costs from our expectations except for A$7m a quarter in Care and Maintenance costs from April 2024.

“We also include A$70m in restart costs, inclusive of the new water treatment plant, which should help improve operating overheads. We do not include any other insurance payouts, beyond previous expectations.”

 

29Metals (ASX:29M) share price today

 

 

Albemarle auction does little to stir lithium players

Multiple reports have indicated Albemarle collected a price of around US$1300/t for a 5.77% Li2O cargo of 10,000t of spodumene concentrate as part of a MetalsHub auction.

 

 

The sale followed a smaller 5,000t cargo sold pre-auction for a 6% Li2O equivalent price of US$1200/t by Pilbara Minerals (ASX:PLS) on its Battery Material Exchange auction platform this month. Pilbara’s sale was for a cargo shipping December this year though, dulling enthusiasm somewhat.

They’re both far higher than current spot levels, which range from around US$980/t to US$1150/t depending on who you believe.

Albemarle said it wanted to run the process in part as a price transparency measure.

It mystified market watchers by then not transparently revealing prices once the auction was over.

 

 

Among other assets in China, America and Chile, Charlotte-based Albemarle owns 49% of the Greenbushes mine and 50% of the Wodgina mine in WA, and is commissioning the Kemerton lithium hydroxide plant near Bunbury in the State’s South West.

Anyhow, let’s check whether this made ASX investors feel any better about their spodumene mining stocks.

The answer was a resounding meh, with MinRes (ASX:MIN) and PLS up slightly while IGO (ASX:IGO) dropped 1% and Arcadium (ASX:LTM) fell 2.8%.

The materials sector rose 0.18% on an indifferent day for the ASX’s large cap resources plays.

 

Monstars share prices today

 

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