Leigh Creek Energy (ASX:LCK) share price plummets 14% on capital raise

It’s been a bad start to the week for Leigh Creek Energy shares…

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The Leigh Creek Energy Ltd (ASX: LCK) share price has come out of a trading halt today as one of the worst performers on the ASX. This comes after the energy producer announced a capital raise to progress stage 1 of the Leigh Creek Energy Project.

At the time of writing, Leigh Creek Energy shares are down a sizeable 14.35% to 19.7 cents.

What’s sending Leigh Creek Energy shares lower?

One catalyst for the huge falls in the Leigh Creek Energy share price today may be investor fears over an impending share dilution.

According to this morning’s release, Leigh Creek Energy has successfully raised $18 million (before costs) by a way of placement. The company received support from several Australian and global institutions.

The offer will see 100 million new ordinary shares, at a price of 18 cents each, allocated to participating investors. This represents a 20% discount on the issued capital prior to when the company announced the placement (22.5 cents).

In addition, the new shares will have a one-for-one attached option exercisable at 28 cents within the next 3 years. The issue of the options however is subject to shareholder approval

Leigh Creek Energy will seek to use the proceeds from the capital raise for a number of initiatives. This includes the acquisition of a 3D seismic, drilling and construction of gasifier chambers, acquisition of power generation infrastructure, and general working capital.

Management commentary

Leigh Creek Energy managing director, Phil Staveley spoke about the company’s capital raising efforts:

This $18 million capital injection will enable LCK to continue to move forward with Stage 1 of our flagship project with added confidence and puts us one step closer to our goal of building a plant at Leigh Creek which can deliver urea into the Australian and overseas markets.

The opportunity presented by this capital raise means we can immediately focus all our resources and attention on driving forward the commercial stages of the project.

In the coming weeks we expect to execute the final agreement for engineering, procurement, construction and completion of the urea plant with Korean giant, DL E&C and offer further equity to our existing, loyal shareholders.

The Leigh Creek Energy has gained over 100% in the past 12 months, and is up 14% year-to-date.

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