Northern Minerals Ltd (ASX: NTU) shares have gone nowhere today after the company requested a trading halt prior to market open this morning. By the close of trade Thursday, the Northern Minerals share price was fetching 5.2 cents.
Why is the Northern Minerals share price at a standstill?
The Northern Minerals share price remains unchanged today after the company requested a trading halt, pending a capital raising announcement.
Northern Minerals is yet to release details on the capital raising. However, media outlets have speculated on the potential deal.
According to an article today in The Australian Financial Review, Northern Minerals is looking to raise $20 million in fresh equity via a placement of new shares. According to the terms sent to funds, shares are being offered at 4.9 cents each, a 5.8% discount to the closing level of the Northern Minerals share price yesterday.
The article noted that funds raised would go towards a feasibility study for a processing plant at the company's Browns Range rare earths project in Western Australia and the Northern Territory. It is believed that New York-based corporate advisory outfit EAS Advisors will be handling the placement.
The Northern Minerals share price will remain in a trading halt until an announcement is released to the market, or until the start of normal trading on Tuesday 16 February.
Fast-track to commercial production
Northern Minerals is a producer of dysprosium, which is a heavy rare earth element, from its 100%-owned Browns Range project in Western Australia.
Before Northern Minerals shares entered a trading halt, the company announced it had intentions of fast-tracking its production of commercial rare earths.
According to the announcement released on 10 February, Northern Minerals aims to shave two years from its target date for commercial production at its Browns Range project.
The company's management noted that it had identified a market opportunity to target several facilities outside of China which have both capacity and capability to process a heavy rare earth xenotime concentrate.
Despite the ambitious aims, Northern Minerals will still have to meet specific criteria before being ready for commercial production, including a feasibility study.
In addition to its plans to fast-track a beneficiation-only feasibility study, Northern Minerals has committed to another batch of resource drilling to be completed before mid-year.
Based on the current Northern Minerals share price, the company commands a market capitalisation of around $230 million.
