Adriatic Metals (ASX:ADT) share price plunges 16% on Sandfire update

It hasn't been a good day so far for the exploration company's share price.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Adriatic Metals Plc (ASX: ADT) share price is sliding 15.92% into the red during early afternoon trade and is currently changing hands at $2.80.

Adriatic shares are on the move after major shareholder Sandfire Resources Ltd (ASX: SFR) completed the sale of its equity interest in the company.

Here's what we know.

share price dropping

Image source: Getty Images

Why is the Adriatic Metals share price down 16%?

Sandfire Resources originally announced its intention to divest away from Adriatic yesterday, advising of a secondary placement that was due to take place.

Today Sandfire confirmed it had completed the sale of 34,600,780 CHESS depositary interests – representing ordinary shares – in the capital of Adriatic Metals.

This is is a sizeable chunk of Adriatic's float, and comprises a 16% stake in the company that was sold off today in total.

The lot was sold at a price of $2.80 per Adriatic "secondary placing share", representing a 16% discount to the company's closing share price yesterday, after it went into a trading halt pending a separate announcement.

Effectively, Adriatic's shares were sold to institutional investors and others in the placement below the market price at the time, never a good feeling for current shareholders.

Lead bookrunners, Canaccord Genuity Group Inc, RBC Europe Ltd, and Stifel Nicolaus Europe Limited, each helped in the sale to their pitchbook of institutional investors.

Gross proceeds from the sale came in at $97 million – of which Adriatic Metals will receive none, not even the crumbs.

Aside from Sandfire's divestment, Adriatic also advised it too had completed an institutional placement to raise additional capital, to fund its Vares Silver Project.

Curiously, Adriatic advised that the placing price of 1.5174 pounds per new ordinary share, is equivalent to "A$2.80 per CHESS Depositary Interests representing such New Ordinary Shares" – the exact price of Sandfire's sale.

Canaccord Genuity, RBC and Stifel Nicolaus were joint bookrunners on Adriatic's placement as well.

The placement formed part of a greater "project finance package" the company completed to fund the construction of the Vares site.

It consisted of a term sheet with a liability of US$142.5 million, comprised of a US$120 million debt senior debt facility and a US$22.5 million copper stream.

The news isn't enough to save the Adriatic Metals share price today, with investors driving prices lower from the selling pressures.

Adriatic Metals share price snapshot

The Adriatic Metas share price has climbed 20% this year to date, however has struggled over the last 12 months.

There, it has posted a return of just 18%, behind the S&P/ASX 200 index (ASX: XJO)'s gain of around 20% in that time.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Resources Shares

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Resources Shares

2 ASX mining shares to buy: Expert

Here's what is being recommended to investors.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Broker Notes

Up 59% in a year, should you still buy BHP shares today?

Three investment experts deliver their outlook for BHP shares.

Read more »

Happy miner with his hand in the air.
Resources Shares

Fortescue shares: 3 reasons to buy and 3 reasons to sell

The iron ore miner's shares are climbing higher today.

Read more »

A group of business people cheering.
Resources Shares

Why this ASX lithium stock is charging higher after a major breakthrough

Finniss restart momentum sends Core Lithium shares higher today.

Read more »

Woman with gold nuggets on her hand.
Resources Shares

Capricorn Metals delivers solid Q3 FY26 gold production and growth update

Capricorn Metals delivers strong Q3 FY26 gold production and stays on track for guidance, with expansion and cash growth highlights.

Read more »

Two miners examine things they have taken out the ground.
Resources Shares

Ramelius Resources confirms guidance, strong March quarter gold output

Ramelius Resources confirmed guidance and delivered strong gold production in the March quarter.

Read more »

Miner looking at a tablet.
Resources Shares

BHP shares just dropped — is this your chance to buy the dip?

Sentiment is mixed, but the most bullish view sees 37% upside.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Resources Shares

2 ASX 200 mining shares this fund manager is backing for long-term growth

Blackwattle is invested in the ASX 200's largest diversified miner and its biggest lithium producer.

Read more »