The Sayona Mining Ltd (ASX: SYA) share price is tumbling today following the launch of a renounceable rights issue. In late afternoon trade, the emerging lithium miner's shares are swapping hands for 3.7 cents, down 5.1%.
What did Sayona announce?
Investors are offloading the Sayona share price after the company announced a rights issue that will dilute shareholdings.
According to its release, Sayona advised it has launched a renounceable rights issue to raise up to $20.4 million before costs. The 1-for-6 offer will be available to all eligible shareholders with a registered address in Australia and New Zealand.
The company has determined the issue price to be 3.2 cents per share, representing a 10.5% discount on the 30-day volume-weighted average price (VWAP).
Sayona noted that its major shareholder, Piedmont Lithium Ltd (ASX: PLL), will participate in the rights issue.
The funds received will support the company's growth plans in Québec, Canada. This entails advancing its flagship Authier Lithium Project and the upcoming Tansim Lithium Project together with Piedmont.
The rights issue will close on 20 April 2021, with the new ordinary shares to start trading on 28 April 2021.
Words from management
Sayona managing director Brett Lynch touched on the potential market opportunity, saying:
Québec offers enormous competitive advantages as a lithium producer and downstream processor due to its world-class infrastructure and labour, environmentally friendly hydropower and access to the fast- growing North American battery market.
This funding will help ensure we can cement our lithium projects as key to the region's clean energy future, with the potential for clean and green lithium hydroxide production direct to Ontario automakers and North Carolina battery makers.
About the Sayona share price
Despite today's fall, the Sayona share price has lifted more than 400% since this time last year. However, most of the strong gains came from the start of 2021 on the back of renewed optimism in the lithium market.
Sayona commands a market capitalisation of roughly $140 million, with more than 3.7 billion shares outstanding.
