The Australasian Gold Ltd (ASX: A8G) share price has come out of a trading halt today to climb during mid-afternoon trade. This comes after the gold and precious metals mining company provided an update on its recent equity raise.
At the time of writing, Australasian Gold's shares are swapping hands for 46.5 cents, up 2.20%.
Australasian Gold completes placement
One catalyst for today's rise in the Australasian Gold share price could be investor concerns over an impending share dilution.
According to its release, Australasian Gold announced it has received firm commitments for its strategic placement to raise $2.5 million.
The company highlighted that it had strong support from major lithium industry players, Ruifu and Xinfeng, investing $1 million each. The remaining amount came from an array of sophisticated and professional investors.
The offer will see approximately 5.55 million new ordinary shares issued at a price of 45 cents apiece. This represents around a 1% discount to the last closing price of 45 cents on 8 October (before going into a trading halt).
Australasian Gold will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to an additional 15% of its total shares to be issued without shareholder approval.
The company will primarily use the proceeds to accelerate lithium exploration at the Mt Peake Lithium project in the Northern Territory. In particular, the funds will be allocated to the following:
- Surface mapping, geochemical sampling, geophysics and future drilling programs at the Mt Peake lithium project;
- Exploration activities at future lithium exploration projects; and
- General working capital.
Australasian Gold managing director, Dr Qingtao Zeng commented:
We are delighted to have attracted major industry participants at this early stage of our discovery journey. We have an exciting lithium project in an under-explored pegmatite province and we look forward to accelerating our exploration efforts over the coming weeks and months.
Settlement of the new shares is expected to occur on or around next Monday 18 October.
About the Australasian Gold share price
Adding to today's rise, Australasian Gold shares have gained around 130% since listing on the ASX in May. The company's share price reached an all-time high of 53 cents in late September.
Based on valuation grounds, Australasian Gold presides a market capitalisation of roughly $15.6 million, with over 33.6 million shares outstanding.
