Why the Lion Energy (ASX:LIO) share price is soaring 65% today

The Lion Energy Ltd (ASX: LIO) share price is one of the best performers on the ASX today, outpacing almost all shares. We take a closer look.

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The Lion Energy Ltd. (ASX: LIO) share price is one of the best performers on the ASX today, outpacing almost all shares. This comes after the company announced a capital raising to complete operations and pursue its green hydrogen strategy.

At the time of writing, the energy producer's shares are fetching 6.3 cents apiece, up an incredible 65.79%.

Lion's capital raising efforts

Investors are driving up the Lion shares as the company provided some positive developments in morning trade.

According to the release, Lion advised it is undertaking a capital raise to fund its operations and green hydrogen strategy.

So far, the company has received $0.93 million from professional and sophisticated investors. However, Lion is seeking shareholder approval for 2 other tranches, to receive a total of $2.8 million in the placement.

The first tranche consists of 31.1 million new shares, utilising the company's 15% placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

The 1:1 attached options to the placement are subject to shareholder approval at the annual general meeting scheduled in July.

The second tranche has been committed through convertible notes for the amount of $1.51 million from new and existing investors. The unsecured notes have a maturity date of 31 December 2021. Each share issued from the convertible notes will include a 1:1 option and earn an interest of 12% per annum. The entire second tranche is subject to shareholder approval.

The third and final tranche will be issued to the company directors for the value of up to $350,000. Again, this is subject to shareholder approval.

All three tranches are issued at a price of 3 cents per share and fall under the same terms set out by the company. The options contain a strike price of 4 cents per share, with a 2-year expiry from the date of issue.

Furthermore, the board revealed that it plans to issue a total of 18,050,000 performance rights to the directors and officers. This is part of the remuneration package, and each performance right can be converted to one ordinary share. A shareholder will have the right to vote for or against this proposal at the general meeting.

Management commentary

Lion executive chair, Tom Soulsby welcomed the partnership, saying:

We are pleased to work with the team at Peak to support Lion's legacy business and related new hydrogen studies and our potential foray into the Australian clean energy space. Peak brings a wealth of experience in supporting companies with green hydrogen and renewable investment businesses in Australia.

The proceeds of the placement will be used towards advancing the onshore seismic operations in the East Seram PSC. In addition, remaining funds will be allocated to studying hydrogen production on Seram Island, working capital, and exploring business opportunities in green hydrogen.

Lion share price snapshot

In the past 12 months, the Lion share price has jumped more than 270% and is up over 150% year-to-date. The company's shares reached a 52-week high of 9.2 cents just last week.

On valuation metrics, Lion presides a market capitalisation of roughly $13.2 million, with 207 million shares outstanding.

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.

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