Why the Australian Strategic Materials (ASX:ASM) share price is rising

Here's why the Australian Strategic Materials (ASX:ASM) share price is rising today

Up 265% in 1 year, the Australian Strategic Materials (ASX: ASM) share price is gaining in late morning trade. We look at the latest announcement.

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 26, 2021 1:01 pm AEDT

The Australian Strategic Materials Ltd (ASX: ASM) share price is gaining today, up 2.2% in late morning trade.

Below, we take a look at the ASX resource shares capital raising announcement.

Bull market — Image source: Getty Images

What did the company report?

The Australian Strategic Materials share price is moving higher after the company reported it had received firm commitments to raise $65 million via the placement of 13.5 million shares.

The company will issue the new shares for $4.80 per share. That's 5.7% below the current share price of $5.09 per share. The placement is scheduled to settle on 1 April.

The company also said it plans to raise an additional $41 million by undertaking a "1 for 14 pro-rata non-underwritten, non-renounceable entitlement offer to eligible shareholders". The company expects the entitlement offer, also at $4.80 per share, to open on 7 April and close on 16 April.

Australian Strategic Materials intends to use the new funds for the final stage of engineering and construction of its proposed Korean Metals Plant and additional engineering work at its New South Wales Dubbo Project.

Words from management

Commenting on the capital raising, ASM managing director David Woodall said:

The funds raised significantly bolster our balance sheet, placing the company in a strong position as we progress key workstreams which include development of the proposed Korean Metals Plant and advancing key FEED workstreams on the Dubbo Project in New South Wales.

Importantly, we continue to advance our strategy for sustainable growth, with a primary focus on developing ASM into a globally relevant, independent and integrated metals producer by 2022.

Australian Strategic Materials share price snapshot

Australian Strategic Materials is a relative newcomer to the ASX, having first listed on 30 July 2020.

Since then, the ASX resource share has provided shareholders with a good run, with shares up 265% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is up 37% over that same time.

Year-to-date, the Australian Strategic Materials share price is down 23%.

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