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.
