MMG, the offshore metals producer owned by state-backed China Minmetals Corp, announced plans to raise approximately US$1.6 billion through a combination of share placement and convertible bond issuance. The fundraising initiative aims to support the company’s business expansion amid surging demand for metals driven by development in artificial intelligence (AI) infrastructure.

The company intends to generate about HK$6.27 billion by placing 705.9 million shares on the Hong Kong Stock Exchange. Additionally, it plans a zero-coupon bond offering valued at US$800 million, with bonds convertible into listed shares at a later date. The proceeds will be allocated to refinancing existing debt, backing project growth, funding strategic acquisitions and investments, and replenishing working capital, according to a filing with the exchange.

Set at HK$8.88 per share, the placement price reflects an 8.8 percent discount to the previous closing price, representing approximately 5.5 percent of the company’s total enlarged share capital. The convertible bonds carry a conversion price of HK$10.21, which is roughly an 18 percent premium to MMG’s average share price over the past five trading days. If fully converted, the bonds could translate into about 613.9 million shares, or 5.1 percent of MMG’s outstanding stock.

MMG produces key metals such as copper, zinc, and gold, commodities increasingly linked to the global expansion of AI technology, which requires substantial metal inputs for computing and electrical infrastructure. Copper futures have risen roughly 15 percent on the New York exchange so far this year, reflecting strong demand.

Despite the broader price gains, MMG’s shares fell 12 percent to HK$8.58 following the announcement, wiping out their gains for the year. The Hang Seng Index declined 1.4 percent on the same day. Analysts suggest Chinese copper producers like MMG have underperformed relative to metal prices due to a market rotation favoring AI-related stocks and apprehensions about a potential global demand slowdown.

However, HSBC Holdings analysts described some of these concerns as exaggerated and viewed the recent weakness in copper stocks as a buying opportunity. An HSBC report highlighted MMG’s strong earnings sensitivity to copper prices, noting the company’s solid production growth and disciplined cost management. The bank maintains a buy rating on MMG’s Hong Kong-listed shares with a price target of HK$11.20, implying a potential 31 percent upside from current levels.