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Chalice Mining (ASX: CHN) share price flat on upsizing

A woman lying face down on the couch, indicating a flat ASX share price
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The Chalice Mining Ltd (ASX: CHN) share price has taken a slight knock and enters the red today. Shares are trading sideways after the company announced the upsizing of its share purchase plan, as a result of it being heavily oversubscribed.

Details of the upsizing

Chalice cited strong support from eligible shareholders in the share purchase plan (SPP). This has led to a substantially oversubscribed SPP. Reportedly, more than 2,300 applications were received to take part. The resulting value totals $47 million worth of shares at the issuant price of $3.75.

This comes after Chalice recently successfully completed the institutional portion of the placement on 8 December, raising $100 million.

The board of directors, under their discretion, decided to increase the SPP to approximately $15 million, up from the previously allotted $10 million.

The SPP increase will directly lead to an increase in shares issued, bringing the total to 4 million. With the increase in the SPP, the dilution of Chalice shares now will be close to 1.2%.

Due to the oversubscription, the company also will need to scale-back valid applications. This will result in eligible shareholders being allocated approximately 34% of the shares that they applied for.

Chalice Mining also specified that the SPP shares are anticipated to be issue on 21 January, with trading to become available on them from Friday, 22 January.

Chalice managing director Alex Dorsch commented:

In light of the strong response, the board made the decision to upsize the SPP by 50%, after taking into consideration our capital requirements. The combined proceeds of the recent placement and this SPP will ensure Chalice remains financially strong well into the future, with the ability to rapidly advance Julimar to the feasibility stage.

What are the proceeds for?

The funds raised from the placement will be going towards Chalice Mining’s Julimar discovery. Originally intersected on 23 March 2020, with the finding of high-grade nickel-copper-palladium sulphide, the discovery has continued to expand.

This new funding will enable Chalice to accelerate exploration and development activities, as well as provide general working capital.

In the letter of offer to eligible shareholders, Chalice specified that the placement would provide a 2-year runway to support the activities, including drill programs, scoping, and pre-feasibility studies.

Chalice share price recap

The Chalice Mining share price has returned a monster 1334% in the last year. For much early 2020, you could get shares in this mining company for less than 30 cents.

At the time of writing, the Chalice Mining share price is $4.29, giving it a market capitalisation of $1.47 billion.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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