In March this year, copper miner MMG announced that it had sold its Century zinc mine in Queensland for the grand total of $1. That $1 didn’t go far though. MMG agreed to pay the purchaser $34.5m to cover the costs of rehabilitating the depleted mine site over the subsequent few years (MMG declared the mine had reached its end of life and stopped mining in 2015).
End of life, you say? The group that bought the mine included ASX-listed Attila resources and a few associates. Attila changed its name to New Century Resources at the end of May. In July it raised $5m at $0.15 per share, converted $17m worth of convertible notes into equity at the same price and issued 80 million options to the management team.
In October Attila raised $52m to restart the mine that MMG thought was depleted. The $1.20 per share raising price was eight times the previous raising price and implies a fully diluted market capitalisation of half a billion dollars.
Either MMG did something really stupid, or investors have lost their minds. I’m siding with the latter.
