The Pure Hydrogen Corporation Ltd (ASX: PH2) share price was sinking today following the company's completed placement. By the market's close, the oil and gas exploration company's shares were trading down 9.52% to 28.5 cents.
What's lowering the Pure Hydrogen share price?
Investors have been dumping the Pure Hydrogen share price after an impending share dilution from the company.
According to its release, Pure Hydrogen has raised $9.4 million before costs through a placement to sophisticated and institutional investors. The company will issue 32,430,346 CHESS depositary interests over fully-paid ordinary shares (CDIs) for a price of 29 cents apiece.
Attached to the offer will be half an option available for each CDI subscribed. Each whole option will be unquoted and exercisable into one fully-paid ordinary share at a price of 45 cents up until 30 March 2023.
The company stated that the placement falls under listing rule 7.1, which allows a further 15% of its shares to be issued without shareholder approval.
The proceeds of the placement will be allocated to progressing the company's growth strategy, namely flow testing of the Venus Pilot well. This is expected to occur within the next three months. In addition, Pure Hydrogen will seek to fund its ongoing operations and international projects.
Management commentary
Pure Hydrogen managing director Scott Brown commented:
Pure is now very well-funded to execute its business plan particularly around our well-advanced activities in building a large hydrogen business that establishes the Company as a meaningful player in the hydrogen economy, a sector that is attracting considerable investment. Whilst we are pleased with the progress to date, these new funds raised give us much greater flexibility to grow our hydrogen operations more aggressively.
As well, our CSG operations in the Surat basin are advancing well and could be a significant value catalyst for our company in their own right. The three-month flow testing operations [are] commencing soon and we expect a steady stream of updates once this work stream commences.
About the Pure Hydrogen share price
The Pure Hydrogen share price has gained 470% in the past twelve months and is up by around 217% year to date. The company's shares reached a multi-year high of 44 cents this month, before backtracking since.
Based on valuation grounds, Pure Hydrogen commands a market capitalisation of around $80 million, with roughly 277 million shares outstanding.
