The Nova Minerals Ltd (ASX: NVA) share price has returned from a trading halt with a thud on Monday.
In late trade, the gold developer's shares are down 10% to 85.5 cents.
Why is the Nova Minerals share price sinking today?
The Nova Minerals share price has come under pressure today following news that the company has completed the sale of a portion of its investment holding in lithium developer Snow Lake Resources.
According to the release, the company has sold 3 million Snow Lake Resources shares in an underwritten secondary offering, which represented approximately 31% of its holding, at a price of US$6.00 per share.
This represents a 6.25% discount to the closing price on the day but an 11.6% discount to the current Snow Lake Resources share price on the Nasdaq.
The release advises that the company received total proceeds of US$18 million (A$24 million) before underwriting fees and offering expenses.
In light of this sale, the company is now fully funded to continue its aggressive resource development drilling and study programs at its 9.6 Moz Estelle Gold Project. Funds will also be used for general working capital purposes.
Based on the Nova Minerals share price performance today, some investors appear to be disappointed with the selldown given booming lithium prices.
Management commentary
Nova's CEO, Christopher Gerteisen, believes the sale was the right move and represents a major milestone. He commented:
"This funding represents another milestone achievement for the Company and illustrates our strict capital management strategy, of identifying and entering strategic investments cheaply, growing them over time, and then monetising them to fund our path to production at the Estelle Gold Project, all while minimising dilution to Nova shareholders and keeping debt off our balance sheet.
"The price obtained for the sale of our Snow Lake shares, which was a complex transaction given Nova's position as a major founding shareholder, was dictated by the regulatory approval timeframe and market conditions, with the LIT ETF, NASDAQ, many of the lithium juniors, and other major lithium indicators all heavily down having experienced a correction at the time of pricing.
"Nova is a gold company focused with passion, determination, and purpose on developing our flagship Estelle Gold Project. The opportunity cost of not being fully funded and committed to completing the full slate of aggressive 2022 work programs, which are expected to add enormous value to the Company with so much resource upside at play, was not an option we considered."
