How to Think about the Metals Acquisition IPO for Copper Investors

Staff Writer

MAC Copper Proposition

Investors seeking exposure to pure copper mining opportunities on the Australian Securities Exchange (ASX) are presented with a hobbled opportunity as Metals Acquisition Limited (MAC) makes its secondary listing on the ASX. The IPO, while offering a discount, has its funds earmarked for partially deleveraging the MAC Special Purpose Acquisition Company (SPAC), which is laden with debt.

Few Copper Options

The absence of decently managed exposure to copper on the ASX, particularly after the takeover of OZ Minerals, leaves investors with limited options. MAC, with its single operation but a keen appetite for acquisitions and mergers, stands out amidst the alternatives. However, its high leverage and focus on expansion through M&A transactions add an element of risk.

BHP Alternative

Investors comparing their options for copper exposure will find that BHP, while a significant player, offers exposure to a range of commodities, diluting the purity of copper exposure. Similarly, S32, while in the mining space, faces uncertainties, and its portfolio includes non-copper assets. Sandfire Resources (SFR) presents a peculiar case with its operations in Spain and Botswana, lacking Australian exposure.

Cleanest Dirty Shirt

Other alternatives such as A1M boast small but high-grade resources, while CVV demonstrates competent management despite lower-grade assets. However, the landscape is cluttered with companies like AMI, DVP, AIS, RXM, and HGO, each facing their own challenges, ranging from recovering from past setbacks to awaiting market conditions for a turnaround.

Developers like CNB and HMX are still in the exploration phase and years away from production, adding to the scarcity of viable options for investors seeking exposure to copper.

Massive Debt Could be a Problem

Overall, the ASX’s copper mining sector faces a void left by the absence of OZ Minerals, once a significant player. As investors evaluate the prospects of MAC and its peers, they must navigate through a landscape riddled with management issues, debt burdens, and non-copper assets. The long-term success of MAC and its ability to fill the void left by OZ Minerals remains to be seen, making it a pivotal player in shaping the future of copper mining on the ASX.