Alpha (ASX:A4N) share price drops on capital raising efforts

Despite its meteoric rise over 2021, Alpha shares has been struggling of late…

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The Alpha HPA Ltd (ASX: A4N) share price is having a woeful day, continuing its recent downhill trajectory.

This follows the mineral exploration and development company’s announcement of a successfully completed placement.

During late afternoon trade, Alpha shares are swapping hands for 59 cents, down 4.84%.

Alpha to accelerate commercial production plans

A possible catalyst for investors dragging down Alpha shares is an impending share dilution.

In a statement to the ASX, Alpha revealed it has raised $50 million (before costs) by a way of placement. Approximately 90.9 million new ordinary shares will be issued at a price of 15.5 cents each to participating institutional and sophisticated investors. This represents a discount of 11.3% on the last closing price of 60 cents per share.

The company will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to 15% of its shares to be issued without shareholder approval.

Funds raised from the placement will be allocated primarily towards accelerating the construction of Alpha’s Precursor Production Facility (PPF). The remaining monies will be used for the fast-tracking of long-lead items, land acquisition, and general working capital purposes.

What did the managing director say?

Alpha managing director, Rimas Kairaitis welcomed the successfully placement, saying:

We are delighted with the level of support received from new and existing shareholders and the strong endorsement for our PPF strategy. The Company is extremely excited by the opportunity to fast-track commercial production of its ultra-high purity precursors and establish itself as a premium supplier of these products into a rapidly growing array of end user markets.

Furthermore, Mr Kairaitis went on to talk about the company’s PPF strategy, adding:

The ability of the PPF to be integrated into our commercial plant will not only enable us to pull forward valuable additional cash flows for the business but importantly will facilitate the fast-tracking of several important work streams for the full-scale commercial facility. With the PPF now fully funded we look forward to executing on its timely delivery and positioning the Company as a recognised global producer of high purity aluminium products.

About the Alpha share price

Since this time last year, Alpha shares have posted a gain of more than 280%, reflecting positive investor sentiment. The company’s share price reached an all-time high of 67.5 cents late last month.

On valuation grounds, Alpha commands a market capitalisation of around $408 million, with 692 million shares on issue.

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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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