Shares of building materials and mining group Afrimat were having their worst day in more than two months on Thursday afternoon, following a R680m bookbuild to fund growth of its new manganese and rare-earth minerals interests.
Afrimat announced after markets closed on Wednesday it was planning on a bookbuild equating to about 5% of its market capitalisation, after strong demand increased its size, with shares equivalent to 8.5% of its market value expected to be listed on August 2.
The issue price of R50.85 per share represents a 7.2% discount to its closing price on July 27, and in afternoon trade on Thursday Afrimat was down 5.51% to R51.80, valuing it at R7.58bn on the JSE.
The funds will be primarily used to fund two long-life projects, but Afrimat added it continued to explore other opportunities.
Afrimat announced in May 2021 it would buy the Gravenhage manganese mining right in the North West for R650m, a project expected to require as much as R1.5bn.
In December, the group also announced a R550m deal for the Glenhover mine in Limpopo, which may cost as much as R1.5bn, with feasibility studies yet to be completed. This deal brought phosphate stockpiles, rare earths and a vermiculite mining right.
Small Talk Daily’s Anthony Clark said while Afrimat was mostly debt free, and it generated significant cash flow from its iron ore operations, recent falls in the steelmaking ingredient meant it was no longer “obscenely profitable”.
“I would imagine given the capital commitments that Afrimat needs they felt going to the market to raise a bit of comfort cushion cash would be opportune,” he said.
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