The Sandfire Resources Ltd (ASX: SFR) share price is starting the week in the red.
In afternoon trade, the copper miner's shares are down 0.5% to $4.76.
Why is the Sandfire share price falling?
The weakness in the Sandfire share price today has been driven by the company completing its institutional placement.
According to the release, the company has successfully closed the institutional component of its 1 for 8.8 pro-rata accelerated non-renounceable entitlement offer to raise approximately $147 million.
These funds were raised at an offer price of $4.30 per share, which represents a 10.2% discount to the last closing price of $4.79. In light of this discount, today's modest decline by the Sandfire share price is pretty good outcome for shareholders.
A further $53 million will now be raised via a fully underwritten retail entitlement offer.
Why is Sandfire raising funds?
Management notes that the equity raising strengthens Sandfire's balance sheet, providing enhanced financial flexibility. It also ensures that the company remains well funded to progress its ongoing strategic growth initiatives and exploration across its portfolio.
Furthermore, proceeds will be used to repay the ANZ Corporate Debt Facility and fund increased working capital as Motheo progresses from construction to first production and ramp up. This is expected from early in the fourth quarter of FY 2023.
Sandfire chair, John Richards, commented:
We are very pleased with the level of support shown by our shareholders for the Institutional Entitlement Offer. This raising increases our financial flexibility, putting the Company in a strong financial position to continue to execute our strategy to deliver growing and sustainable copper production from our portfolio of leading international projects.
