Why the King Island Scheelite (ASX:KIS) share price is surging 18% today

The King Island Scheelite (ASX: KIS) share price is surging 17% today following a completed capital raise. Here are the details.

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The King Island Scheelite Limited (ASX: KIS) share price is rocketing in mid-afternoon trade following a completed capital raise.

At the time of writing, the mining company's shares are swapping hands for 26.5 cents, up 17.78%.

What's driving the King Island Scheelite share price higher?

The King Island Scheelite share price pushes higher as investors appear to welcome the company's efforts to become debt-free.

In today's release, King Island Scheelite advised that it has completed a placement to raise $5.6 million. This will see 28 million new ordinary shares issued, which the company offered at 20 cents apiece.

The company said the placement falls under listing rule 7.1, which allows a further 15% of its shares to be issued without shareholder approval.

Swiss investment company DACHS Capital AG took up the bulk of the offer, with 20 million shares subscribed. The remaining balance of 8 million shares was allocated to Australian professional investors through MAC Equity Partners – the lead manager.

King Island Scheelite said that it would use the funds to repay its entire debt of $4.7 million, including any interest accrued. Previously the company had racked up an interest bill when acquiring some fixed property next to the Dolphin mine site.

The left-over monies from the placement will be put towards working capital to progress operations at the Dolphin mine.

Words from management

King Island Scheelite executive chair Johann Jacobs commented:

DACHS Capital AG became a shareholder in the company in early January 2021 and we are extremely pleased that they have shown the confidence in KIS to increase their investment and become a substantial shareholder.

We look forward to a strong long-term association with our new shareholders as we develop the Dolphin project and resume tungsten mining operations in Tasmania.

The King Island Scheelite share price has gained more than 500% over the past 12 months and 150% year-to-date.

Motley Fool contributor Aaron Teboneras 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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