New | MMG marks biggest intraday drop in a year after unveiling HK$4 billion rights issue

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Andrew Michelmore says the rights issue represents a meaningful step as MMG seeks to reduce gearing. Photo: May Tse

Eric Ng

Published: 11:37am, 2 Nov 2016Updated: 10:10pm, 2 Nov 2016

Shares of MMG posted their biggest intraday plunge in more than a year after the overseas mining unit of state-owned metals trading giant China Minmetals unveiled a rights issue at a sharp discount to raise funds to repay debt and fund projects.

The stock plummeted by as much as 12.2 per cent to HK$1.8, its biggest intraday decline since August 24 last year. It closed 11.7 per cent lower on Wednesday at HK$1.81.

The Melbourne-based company, whose Las Bambas copper mine in Peru only began production this year after US$9.7 billion was spent on its takeover and construction in the past two years, said it was raising a further HK$4 billion through a rights issue.

“A rights issue is the most equitable means of raising funds as it provides all shareholders

with an opportunity to participate in the offer,” chief executive Andrew Michelmore said in a filing to the Hong Kong bourse late on Tuesday. “The rights issue represents a meaningful step as the company seeks to reduce gearing.”

The firm has proposed to issue one new share for every two existing shares held at HK$1.50 each, a 26.8 per cent discount to Tuesday’s closing price of HK$2.05.

MMG said it planned to use HK$3.2 billion of the proceeds to repay debt and HK$718 million to finance project development.