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Analysts are once again raising the prospect of an equity raising for 29Metals after the copper miner defied chatter in May that it could be in search of cash.

RBC, which has only recently initiated coverage on 29Metals, has joined the chorus of analysts suggesting a raise could be on the cards due to challenges with its Capricorn copper mine in North Queensland.

Their base case assumes that 29Metals will fund the restart of its Capricorn copper project and expected business continuity through a $40m debt facility being drawn down in the fourth quarter of this year and a $60m capital raising to help cover the Capricorn restart.

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Many in the market had been betting that an equity raising could be afoot after challenges faced by 29Metals with wet weather that wash out the Capricorn copper operations for an extended period in the March quarter.

The market value of 29Metals has fallen sharply as a result, currently at about $394m, with the fall also compounded by the decline in the copper price.

The money is needed for the rehabilitation phase of the mine, which would take some time to return to production and had taken a year of earnings out of the operation.

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The RBC analysts said they expected this year to be a year of recovery for the miner and expect production growth of copper equivalent of about 28 per cent and 22 per cent respectively for 2024 and 2025, spurred on by higher volumes and better quality ore at its Golden Grove mine and its recovery at Capricorn.

They anticipate the copper production growth and no remaining copper hedges to triple earnings before interest, tax, depreciation and amortisation to $244m for 2024 and $386m for 2025.

29Metals expects the recovery of its Capricorn mine to cost between $87m and $105m over 2023 and 2024.

And while analysts expect Capricorn to return to full production next year, they remain cautious on required approvals, the evaluation of its water treatment plant and the release of significant water volumes, which is likely constrained to the wet season between November and April and the volume required to be treated.

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They do not expect full production at Capricorn until 2025, but assume a $75m insurance payout for Capricorn.

The analysts believe that the $175m to $218m in capital spending cannot be funded from existing debt and forecast cashflow expectations.

In the past, 29Metals has worked with investment banks Morgan Stanley, Macquarie Capital and Credit Suisse.

The company may use the announcement of its results in August as an opportunity to announce plans for a raise.

29Metals said this month that the Capricorn Copper recovery plan was progressing, with operations on track to be reinstated in August.

A further update regarding the recovery plan progress would be reported in the 29Metals quarterly report for the June quarter, planned to be released on July 25.

Lenders have provided the group with debt covenant relief and 29Metals has maintained substantial liquidity with a $127m cash balance at June, including the proceeds of the draw down of the group’s $US40m Revolving Capital Facility, previously foreshadowed.

It said it continued to work with insurers regarding property damage and business interruption as a result of the impact of the extreme weather event.

The group had earlier said there would be complete reinstatement in the Capricorn Copper operation in the middle of the first half of next year.