The Core Lithium Ltd (ASX: CXO) share price has returned from its trading halt and is sinking lower.
At one stage today, the lithium-focused mineral exploration company’s shares were down as much as 17% to 28.5 cents.
The Core Lithium share price has since recovered a touch but is still down 4% to 33 cents.
Why is the Core Lithium share price sinking lower?
Investors have been selling the company’s shares this morning after it announced firm commitments for its $40 million placement.
According to the release, the company is raising the funds through the placement of 160 million new shares to institutional investors at 25 cents per share. This represents a 27.5% discount to its last close price.
The company advised that demand for the placement was very strong and the shares will be issued to a select group of new high-quality institutional investors. These investors are primarily located in North America, Europe, and Australia and are aligned with the company’s vision of soon becoming Australia’s next lithium producer.
The proceeds from the placement will be used to support the efficient advancement of the 100% owned Finniss Lithium Project towards development and a potential Final Investment Decision (FID).
In addition, some of the proceeds will be used for resource growth drilling. This drilling is aiming to increase mine life to support expanded and extended project revenues.
Core’s Managing Director, Stephen Biggins, commented: “We are very pleased with the overwhelming global support received for our plans to develop the Finniss Lithium Project. This has transferred directly into institutional demand for the Placement, which was very well supported, and Core welcomes the addition of some of the world’s most respected funds as shareholders.”
“Since the end of 2020, the global lithium and greater renewable technology sectors have shown stark improvements and we continue to monitor these industry changes closely, with a view to making key decisions for Finniss at the right time. Core welcomes new shareholders to the business and we strongly appreciate the continued support of our existing shareholders as we aim to join the ranks of Australia’s lithium producers.”