The Vulcan Energy Resources Ltd (ASX: VUL) share price has returned from its trading halt and sunk deep into the red.
In morning trade, the lithium developer's shares are down 17% to $5.12
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Why is the Vulcan Energy share price crashing?
Investors have been selling down the Vulcan Energy share price on Friday after the company completed an institutional placement.
According to the release, the company has raised 66 million euros (A$109 million) via a fully underwritten placement to sophisticated, experienced, professional, and institutional investors at $5.10 per new share.
This represents a sizeable 17.2% discount to where the Vulcan Energy share price was trading prior to its halt.
Management advised that the placement was strongly supported by existing and new shareholders, including a number of global ESG-focused institutions.
Why did Vulcan raise funds?
Vulcan Energy revealed that the proceeds from the placement, together with its existing cash, will be used to progress its integrated renewable energy and lithium project execution strategy, as well as phase two project development activities.
Proceeds will be applied to the ordering of long lead capital expenditure items for the phase one lithium plant and renewable energy plant. This includes the ion exchange system, direct lithium sorption package, and the organic rankine cycle (ORC) type geothermal renewable energy plant.
Vulcan Energy's managing director & CEO, Dr Francis Wedin, was pleased with the placement. He said:
The ~300-strong Vulcan team remains focused on the execution of Phase One of our industry-leading Zero Carbon Lithium Project, providing the European market with critically-needed secure supply of sustainable, battery-grade lithium hydroxide for the electric vehicle market, as well as increased renewable energy supply for energy and climate security.
The Placement positions us to continue delivering our integrated renewable energy and lithium project execution strategy, in line with the recently published DFS development plan.
Dr Wedin also revealed that he expects the next 12 months will be transformative for the company. He adds:
It is shaping up to be an exciting, transformative year for Vulcan, with planned start-up of optimisation plants towards training for commercial operational readiness, production well development to increase current brine flow, completion of bridging engineering, award of key contracts and ordering of commercial long lead items for our Phase One commercial plants.
