29Metals Shares Plunge 31% on $150 Million Equity Raise

29Metals share price (ASX: 29M) surrendered much of its recent rally after unveiling a deeply discounted capital raising that spooked markets, and brought shares back towards the offering price.

The copper and zinc miner’s shares collapsed 30.65% to close at A$0.43 on Tuesday, following the announcement of a $150 million entitlement offer priced at A$0.40 per share, a 35.5% discount to the previous closing price of A$0.62. The sharp decline represents one of the most severe single-day falls on the ASX this year and has left the stock trading 15.69% lower year-to-date, despite still holding gains of 104% over the past twelve months.

The equity raising comprises two components: an institutional placement that has already secured $119 million from sophisticated investors, and a retail entitlement offer for the balance. Major shareholders BUMA and AustralianSuper have committed A$29.2 million and A$26.8 million respectively, demonstrating continued support for the company’s strategic direction. BUMA has additionally agreed to underwrite any shortfall up to A$41.5 million, potentially increasing its ownership stake to 25.8%.

The capital injection comes at a critical juncture for 29Metals, which has faced significant operational headwinds in recent months. In October 2025, the company reported an 86% shortfall in expected zinc production for the fourth quarter, primarily attributable to seismic events at the Xantho Extended underground mine. These production disruptions have raised questions about operational reliability and the company’s ability to meet future guidance targets.

CEO James Palmer addressed the strategic rationale behind the capital raise, stating: “This equity raising is expected to allow us to maintain our commitments to our strategic growth objectives to accelerate value realisation across the portfolio. Specifically, the ongoing investment in Gossan Valley, progression of a Restart Definitive Feasibility Study at Capricorn Copper and drilling to test priority exploration targets across the portfolio.”

Beyond growth initiatives, the funds will address immediate working capital requirements stemming from the seismic disruptions at Xantho Extended. The company plans to allocate capital across its portfolio, including advancing the Gossan Valley project, conducting feasibility work on restarting the Capricorn Copper operation, and funding exploration drilling programs designed to expand the resource base.

The market reaction reflects broader concerns about equity dilution and the company’s near-term production outlook. Analyst sentiment has turned cautious, with Jefferies recently downgrading 29Metals to “Underperform” from “Hold,” citing operational challenges and valuation concerns following the stock’s substantial rally through 2025. The average one-year price target among analysts now sits at A$0.44 per share, marginally above the current trading level but well below the pre-announcement price of A$0.62.

The substantial discount applied to the entitlement offer signals management’s urgency to secure funding and suggests limited pricing power given recent operational setbacks. While major shareholder participation provides a vote of confidence in the company’s long-term prospects, the immediate dilution impact has overwhelmed any positive sentiment around balance sheet strengthening.

Technical indicators now suggest the stock faces immediate resistance at the A$0.50 level, with support potentially emerging around the offer price of A$0.40. Trading volumes spiked significantly on the announcement day, indicating broad-based selling pressure rather than isolated institutional repositioning.