The Syrah Resources Ltd (ASX: SYR) share price has returned from its trading halt and tumbled lower on Friday.
In early trade the graphite producer's shares have fallen 10.5% to 91 cents.
Why is the Syrah share price sinking lower?
The Syrah share price has come under pressure today after completing a fully underwritten placement.
According to the release, Syrah has raised approximately $56 million (US$42 million) through a placement of 62.2 million new shares to professional and sophisticated investors.
These funds were raised at a price of 90 cents per new share, which represents an 11.3% discount to its last close price.
The company will now push ahead with its plan to raise a further $12 million (US$9 million) via a non-underwritten share purchase plan.
It will also now seek shareholder approval for a $56 million (US$42 million) convertible notes issue to AustralianSuper.
Why is Syrah raising funds?
A portion of the proceeds will be used to progress the company's natural graphite Active Anode Material (AAM) facility in the United States towards a final investment decision for the construction of a 10ktpa AAM plant.
A recent Bankable Feasibility Study confirmed a strong business case for natural AAM production at the facility. Its completion also allowed discussions for project development to progress with potential offtake partners and financiers.
In addition to this, further proceeds will provide additional liquidity to manage a restart decision at Balama Graphite Project in Mozambique. This will put the company in a position to potentially benefit from the burgeoning electric vehicle market.
Syrah's Managing Director and CEO, Shaun Verner, explained: "We are extremely pleased with the strong level of support that Syrah has received for this Placement. The Company is now in a robust financial position to progress the Vidalia Battery Anode Material Project towards a final investment decision, with additional liquidity to manage a Balama restart decision in an orderly manner in line with market conditions."
"The lithium ion battery sector continues to advance at a rapid rate and creates substantial opportunity for Syrah – with delivery of our objectives for Vidalia and Balama we will be well placed to maximise this opportunity for the benefit of our shareholders," he concluded.
