Why is the Element 25 (ASX:E25) share price tumbling 8% today?

The Element 25 (ASX: E25) share price is down 7.8% in morning trade. We look at why investors are selling the ASX resource explorer.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published March 24, 2021 12:54 pm AEDT

The Element 25 Ltd (ASX: E25) share price is firmly in the red this morning. At the time of writing, shares were down 8.6% at $2.45

This comes after the ASX resource explorer emerges from a 2-day trading halt it requested pending today's capital raising announcement.

Below, we take a look at the details of Element 25's capital raising.

Two men react in shock at Evolution share price drop record profit — Image source: Getty Images

What did Element 25 report today?

The Element 25 share price is moving lower this morning. Consequently, this comes after the company reported it had received commitments from investors for a $35.5 million capital raising.

The placement of 16,136,364 shares, which Element 25 said received strong support from "a leading Swiss ESG fund", was made at $2.20 per share. That's 8% above Element 25's 30-day weighted average share price before the placement. However, it's 18% below yesterday's closing price of $2.68 per share.

Additionally, as the lead broker in the capital raising, Blackwood Capital will receive a fee of 5% of the raised funds.

How will the funds be used?

Element 25 said it intends to use the new capital to fund the stage 2 expansion of manganese concentrate production. This will occur at its 100% owned Butcherbird Manganese Project in Western Australia.

The company also intends to speed up its plans to produce Lithium-Ion battery-grade manganese sulphate from the project. It stated that:

Manganese is emerging as an increasingly important ingredient for EV batteries, with potential supply constraints for nickel and cobalt forcing battery manufacturers to look to high manganese cathodes to produce the vast amount of cathode material required by the EV industry in coming years.

The recent announcement by Volkswagen reinforces this transition to high manganese content on these cathode materials.

Furthermore, the company said the placement shares would be issued without shareholder approval.

Element 25 share price snapshot

Despite this morning's decline, Element 25 shares are up a jaw-dropping 2,360% over the past 12 months. To put that in some perspective, the All Ordinaries Index (ASX: XAO) is up 47% over that same time.

Year-to-date, the Element 25 share price is up 57%.

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