The Australian Vanadium Ltd (ASX: AVL) share price has returned from its trading halt and tumbled deep into the red.
At the time of writing, the vanadium developer's shares are down 17% to 4.7 cents.
Why is the Australian Vanadium share price sinking?
The catalyst for the weakness in the Australian Vanadium share price on Friday has been the completion of the company's equity raising.
According to the release, the company has received firm commitments from existing and new institutional, professional, and sophisticated investors to raise $20 million before costs.
Australian Vanadium is raising the funds through the issue of approximately 425.5 million new shares at a 17% discount of 4.7 cents per share.
The company will now seek to raise a further $7.5 million via a share purchase plan (SPP). These funds will be raised at the same price as the placement.
Though, given the weakness in the Australian Vanadium share price today, it's unclear how many shareholders will take part given they could just buy shares on-market at the same price.
Why is Australian Vanadium raising funds?
The release explains that the funds raised under the placement and SPP will be used to finance ongoing work at the company's Australian Vanadium Project. Proceeds will also be used to develop key downstream markets ahead of finalising debt financing and a final investment decision.
Australian Vanadium's Managing Director, Vincent Algar, commented:
We are extremely pleased with the overwhelming support we have received for this capital raising. The capital raising saw new institutional and sophisticated investors join the register, as well as receiving strong participation from AVL's existing shareholders.
We are also pleased to provide an opportunity for our valued retail investors to participate in the capital raising through the offer of the SPP. The funds raised through the Placement and the SPP will ensure that the Company remains well funded while we implement the next phases of the development program for the Australian Vanadium Project.