Why has the Firefinch share price tumbled 22% in a week?

Here’s what the market has heard from Firefinch over the last 7 days.

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Key points

  • The Firefinch share price has had a rough trot this week, falling nearly 22% over the last 5 trading sessions to reach 89 cents 
  • The drop came amid news two of the company's directors had offloaded a combined 2.75 million Firefinch shares for between $1.10 and $1.13 apiece 
  • Additionally, the company released an update on its planned demerger yesterday, announcing the opening of a pro-rata priority offer for its shareholders 

The Firefinch Ltd (ASX: FFX) share price is struggling lately, slipping 21.75% over the last 5 trading sessions.

Its suffering has come amid news of insider selling and updates on the company’s planned demerger.

At the time of writing, the Firefinch share price is 89 cents, 5.82% lower than its previous close.

For context, the broader market is also having a rough trot. The benchmark All Ordinaries Index (ASX: XAO) is down 1.22% today and 4.6% over the last week.

Additionally, the S&P/ASX 200 Materials Index (ASX: XMJ) has slipped 2.8% today and 7.25% over the last 7 days.

Here’s all the non-price sensitive news Firefinch has released this week.

What’s being going on with Firefinch lately?

The Firefinch share price has tumbled over the last 5 sessions on the ASX amid news of insider selling.

Firefinch director, Brendan Borg sold more than 2.5 million of the company’s shares on-market for slightly more than $1.11 apiece between 29 April and 3 May, according to an ASX release published last Tuesday. Borg retained a holding of 12 million Firefinch shares following the trades.

Funds owned by Firefinch director, Mark Hepburn also sold 250,000 shares on-market on 3 May, receiving between $1.10 and $1.13 per share. Following the trades, Hepburn indirectly owns more than 2 million Firefinch shares.

The company also provided an update on the company’s split and a replacement prospectus yesterday.

While neither release was price-sensitive, the Firefinch share price tumbled 9.5% following their publication.

The demerger will see Firefinch retaining its gold producing assets. Meanwhile, its Goulamina Lithium Project will be managed by new entity, Leo Lithium. Firefinch shareholders will receive 1 Leo Lithium share for every 1.4 Firefinch shares they hold.

They also have access to a pro-rata priority offer under which they can buy 1 new Leo Lithium share for every 10.33 Firefinch shares owned at a cost of 70 cents apiece.

The priority offer – and an accompanying shortfall offer ­– opened yesterday. It’s expected to raise $80 million.

Firefinch shareholders will have the option to vote for or against the demerger at a meeting on 31 May.

If the split is approved, Leo Lithium shares are expected to be handed out to Firefinch shareholders on 9 June.

Leo Lithium is pencilled in to list on 16 June under the ticker, LLL.

Firefinch share price snapshot

Recent falls included, the Firefinch share price has slipped 3% since the start of 2022.

Though, it’s currently 128% higher than it was this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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 Scott Phillips.

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