Why the Pursuit (ASX:PUR) share price is plummeting today

The Pursuit Minerals Ltd (ASX: PUR) share price is plummeting despite announcing it has received firm commitments to fund its growth strategy.

| More on:
falling asx share price represented by toy rocket crashed into ground

Image source: Getty Images

The Pursuit Minerals Ltd (ASX: PUR) share price is plummeting in late morning trade. This comes despite the company announcing it has received firm commitments to fund its growth strategy.

At the time of writing, the minerals exploration company’s shares are fetching for 8 cents, down 7.95%.

What’s driving the Pursuit share price lower?

Investors are scrambling to sell Pursuit shares after an impending share dilution from the company.

According to the release, Pursuit advised it has received firm commitments from sophisticated investors to raise $8.25 million through a strategic placement. This will see the issue of roughly 119.5 million new ordinary shares at a price of 6.9 cents apiece.

In addition, the company will issue 3 million new shares to S3 Consortium Pty Ltd (Stocks Digital) for a nil cash consideration. Pursuit is also paying for Stocks Digital’s marketing services through the allocation of its shares. The latest offer amounts to $207,000 worth of services at the same issue price of 6.9 cents per share.

The acting lead manager to the placement, CPS Capital will be paid 6% of the amount raised in cash. Furthermore, Pursuit will issue 20,000 options to CPS Capital for distribution to the brokers who helped support the placement.

The newly created shares will be issued in a single tranche using the company’s existing placement capacity. Furthermore, listing rule 7.1 allows Pursuit to allocate 43,681,768 shares to investors. The company will also use an extension – listing rule 7.1A to issue the remaining 78,057,362 shares. CPS Capital’s options will fall under Pursuit’s listing rule 7.1.

The proceeds of the placement will be used towards a number of strategic initiatives. This includes advancing its development in the Warrior, Combatant, and Gladiator Projects. In addition to providing general working capital.

Management commentary

Pursuit CEO Mr Mark Freeman commented:

The Company is delighted with the strong support for the placement. This raising will provide critical funding to conduct our inaugural drilling at Phil’s Hill Prospect in conjunction with ongoing Geophysics, Geochem, Land Access obligations on the Warrior Tenements.

The Funding will also be used to progress the new Combatant project in the Murchison and the Gladiator Gold project near Laverton. We are very pleased with the professional manner in how CPS Capital has completed the raising. We look forward to delivering for shareholders and stakeholders.

The Pursuit share price has accelerated to more than 2,000% over the past 12 months and is up 280% year-to-date.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

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.

More on Share Market News

Top 10 - asx shares today
Share Market News

Here are the top 10 ASX shares today

Today, the S&P/ASX 200 Index (ASX: XJO) fought back against the selling pressure throughout the day to finish in the green. …

Read more »

The word inflation written with a ticking time bomb.
Share Market News

Why is it when Jerome Powell sneezes, the ASX 200 catches a cold?

Key points The ASX 200 took a hit following comments from the United States Federal Reserve chair Jerome Powell Expectations …

Read more »

blue arrows representing a rising share price ASX 200
Share Market News

These 3 ASX 200 shares are topping the volume charts this Friday

Finally, a day of green for ASX shares! The S&P/ASX 200 Index (ASX: XJO) is bouncing back strongly today, after a …

Read more »

Young boy wearing suit and glasses adds up on calculator with coins on table
Share Market News

This world-famous fund manager is ‘buying the dip’. Here’s why

Key points Bill Ackman is one of the most famous fund managers in the world He runs Pershing Square Capital …

Read more »

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Share Market News

ASX 200 (ASX:XJO) midday update: ResMed and PointsBet disappoint

At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a much-needed positive …

Read more »

A man activates an arrow shooting up into a cloud sign on his phone, indicating share price movement in ASX tech shares
Share Market News

Is the Betashares Nasdaq 100 ETF (ASX:NDQ) an opportunity in this market correction?

Could the Betashares Nasdaq 100 ETF (ASX: NDQ) be a good opportunity during this correction for both the global share …

Read more »

A woman shouts through a megaphone.
Share Market News

2 ASX growth shares to buy in February with 40% upside

If you’re looking to make some additions to your portfolio in February, then the two ASX shares listed below could …

Read more »

Business woman watching stocks and trends while thinking
Share Market News

5 things to watch on the ASX 200 on Friday

On Thursday, the S&P/ASX 200 Index (ASX: XJO) fought hard and was able to record a small gain. The benchmark index rose …

Read more »