The Magnetite Mines Ltd (ASX: MGT) share price is on fire in early morning trade following its capital raising efforts.
At the time of writing, the iron ore miner's shares are swapping hands for 6.2 cents, up 12.73%.
What's driving the Magnetite Mines share price higher?
Magnetite Mines shares have started today with a bang after providing its latest release to investors.
In a statement to the ASX, Magnetite Mines advised it has received binding commitments to raise $7 million by a way of placement. The scheme welcomed two new institutions, both with substantial expertise in the resources sector. Furthermore, the company noted other interest coming from sophisticated and institutional investors.
Magnetite Mines will issue roughly 120.8 million ordinary shares at a price of 5.8 cents apiece. Interestingly, the placement is priced at a premium of 2% to the 5-day volume weighted average price (VWAP) recorded on 5 May 2021.
The newly created shares will be issued using the company's existing placement capacity. Under listing rule 7.1, this allows up to 15% of its shares to be issued without shareholder approval.
Funds raised from the placement are set to be used primarily for advancing studies for the Razorback High Grade Iron Ore Project. In addition, remaining monies will be allocated towards general working capital, and covering the costs of the issue.
Management commentary
Magnetite Mines executive chair, Peter Schubert touched on the company's capital raise efforts, saying:
We believe that this placement, which is modest in proportion to the Company's market capitalisation, has considerable longer-term benefits for all shareholders.
It brings sophisticated and institutional investors on to our register, which is a positive development as we move the Razorback iron ore project forward, it underpins the financial position of the business and it increases the funds available for the Company's exciting development programme.
Most importantly, it provides a firm financial foundation for your Company as we work towards completing the PFS, which is due by the end of the first half of this year.
The Magnetite Mines share price has accelerated in the past 12 months to record an astonishing gain of close to 6,000%.
