One of the best performers on the local market on Tuesday has been the Galan Lithium Ltd (ASX: GLN) share price.
The lithium-focused mineral exploration company’s shares have returned from their trading halt with a bang and are up almost 17% to 38 cents in afternoon trade.
Why is the Galan Lithium share price storming higher today?
Galan Lithium’s shares were placed in a trading halt on Friday whilst it conducted a capital raising.
This morning the company announced that it has received commitments via a share placement to professional and sophisticated investors to raise gross proceeds of $4 million.
According to the release, the placement received strong support from a range of sophisticated and institutional investors from both Australia and North America.
The $4 million was raised at an issue price of 27.5 cents per share.
Why did the company raise capital?
Management advised that the funds will be used to continue and expand its maiden drilling campaign along the Candelas channel at the Hombre Muerto Lithium project in Argentina, commence initial resource work, and for working capital purposes.
Galan Lithium’s managing director, Juan Pablo Vargas de la Vega, was pleased with the strong support.
He said: “We are pleased to have received such strong support from a range of Australian and North American investors, who now join our existing shareholders in aligning themselves to the success we are looking to achieve through our ongoing exploration at the Hombre Muerto Lithium Project.”
Before adding: “We have achieved positive results to date, which we plan to expand through well planned exploration activities.”
What is the Hombre Muerto Lithium Project?
The company is exploring for lithium brines within South America’s Lithium Triangle on the Hombre Muerto salar in Argentina.
Hombre Muerto is proven to host the highest grade and lowest impurity levels within Argentina and is home to Galaxy Resources Limited (ASX: GXY) and POSCO’s Sal de Vida projects.
The company’s primary target is the adjoining Candelas channel target, which geophysics surveys and more recently drilling, indicate the potential of the project to host a substantial volume of lithium bearing brine.
For now, I would restrict its shares to your watchlist and keep a close eye on its progress.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.