The Syrah Resources Ltd (ASX: SYR) share price has returned to trading following a company announcement.
At the time of writing, the graphite producer's shares are swapping hands for $1.46, down a sizeable 11.52%. This means the company's shares have fallen almost 20% in the past month alone.
What's causing the sell-off?
It's been a disappointing day for the Syrah share price, with investors heading for the hills following the company's capital raise.
According to its release, Syrah advised it has successfully completed its fully underwritten institutional placement and the accelerated institutional component. The latter is comprised of a 1 for 5.9 pro rata accelerated non-renounceable entitlement offer.
Both existing shareholders and new investors supported the company's accelerated institutional component, with 76% of entitlements taken up.
Under the placement, 84 million shares are expected to be issued on 17 February. In regards to the institutional entitlement offer, 45 million new shares will be allocated on the same date.
The price set to eligible investors across the capital raise stood at $1.48 per new share. This represented a 10.3% discount to Syrah's last closing price of $1.65 per share on 4 February.
In total, the placement raised approximately $125 million, and the institutional entitlement offer raised around $67 million.
In addition, Syrah launched a $58 million retail entitlement offer which is scheduled to open on 14 February.
Eligible retail shareholders will have the opportunity to apply for 1 new share for every 5.9 existing Syrah shares owned.
The closing date for the retail offer is 28 February.
Proceeds of the equity raising, combined with Syrah's existing cash balance, will be used to:
- Fully fund the remaining US$165 million (A$230.92 million) of estimated installed capital costs of the Vidalia initial expansion;
- Fund estimated Vidalia operating costs, expansion studies and product development for 2022;
- Transaction costs of the offer; and
- Fund Balama tailings storage facility expansion and sustaining capital costs.
About the Syrah share price
Over the past 12 months, the Syrah share price has gained 25% but is down almost 20% year to date. The company's shares reached a 52-week high of $2.56 earlier this year, before being heavily sold off.
Based on today's price, Syrah commands a market capitalisation of around $735.63 million, with approximately 498.73 million shares outstanding.
