The Galan Lithium Ltd (ASX: GLN) share price has tanked 20% from its all-time high of $1.34 on 6 August.
Galan is an emerging lithium producer focused on its Hombre Muerto West (HMW) Project located in Argentina.
Its recent weakness could be pointed at the company’s $50 million capital raising and weakness across the broader market and lithium sector.
Galan successfully raises $50 million to accelerate development plans
On 13 August, Galan advised that it received firm commitments to raise $50 million through a two-tranche institutional placement priced at $1.15 per share.
The first tranche will issue 25.9 million shares, raising a total of $29.8 million. The issue price of $1.15 represents a 10.2% discount to its last closing price of $1.28 on 11 August.
The company said that “as a result of significant demand received in the placement, Galan is also seeking to issue a further 17.6 million new fully paid ordinary shares in a second tranche”, subject to shareholder approval.
Unfortunately, the Galan Lithium share price tanked 5.47% to $1.21 on the day of the announcement.
The funds from the placement will be used to accelerate including:
- Drilling activities at HMW to establish well fields for production and convert existing resources to reserves
- Ongoing exploration activities
- Completion of feasibility studies at HMW and Canadelas
- General working capital
Broader volatility weighs on Galan Lithium share price
The S&P/ASX 200 Index (ASX: XJO) has struggled to make headway in recent weeks, driven by factors such as the delta variant and concerns about economic growth.
The market tested the resolve of bullish investors last week, plunging a harsh 1.90% on Thursday 9 September to a 1-month low of 7,369.5.
In addition, the broader lithium sector has also struggled to re-test previous highs, with high profile names such as Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) down a respective 16% and 10% from August record highs.