Why did this ASX mining share just crash 45%?

This base metals developer's shares are at a 52-week low.

| More on:
a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Panoramic Resources Ltd (ASX: PAN) share price is having a very tough time on Thursday.

The ASX mining share crashed as much as 45% to a 52-week low of 5 cents this morning.

The base metals developer has recovered a touch since then but remains down by 37% at 5.8 cents.

Why is this ASX mining share being sold off?

The catalyst for this share price weakness has been news that the company has completed an institutional placement.

According to the release, Panoramic has completed the bookbuild for a fully underwritten two-tranche placement of new fully-paid ordinary shares. This will see it raise $40 million (before costs) at a fixed offer price of $0.05 per new share.

That's a massive 45% discount from where the ASX mining share was trading prior to its halt.

Given this discount, it will come as no surprise to learn that the placement received strong support from both new and existing shareholders. This includes a number of new high-quality institutional investors joining the Panoramic share register. In addition, several Panoramic directors have committed to participate in tranche two of the placement.

Why is it raising funds?

The release explains that the proceeds from the placement will be used to strengthen the company's balance sheet and remove the short-term working capital pressure caused by the delay of revenue.

The latter has been caused by a filter press head plate failure and disruptions caused by a one-off, severe weather event. The broken filter press head plate has been replaced and was fully operational again on 9 July.

Panoramic Managing Director and CEO, Victor Rajasooriar, commented:

The new funding relieves the short-term pressure that was placed on our balance sheet and we're determined to repay the faith of shareholders by delivering to plan for the next 12 months and beyond. While we're disappointed to have needed additional equity funding at this time, we're also encouraged by the support of existing and new investors. We're also pleased that all of our eligible current shareholders can participate through the Share Purchase Plan.

Motley Fool contributor James Mickleboro 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.

More on Materials Shares

a woman smiles as she checks her phone in one hand with a takeaway coffee in the other as she charges her electric vehicle at a charging station.
Materials Shares

Guess which ASX mining stock is rocketing on deal with lithium giant SQM

The two parties are looking at a potentially significant lithium project in Europe.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Materials Shares

Pilbara Minerals shares drop on major P2000 lithium expansion news

This lithium miner could be about to increase its production to 2 million tonnes a year.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Materials Shares

ASX small-cap stock explodes 210% on new copper find

This small cap has tripled in value in a single day. But why?

Read more »

Mining workers in high vis vests and hard hats discuss plans for the mining site they are at as heavy equipment moves earth behind them, representing opportunities among ASX 200 shares as nominated by top broker Macquarie
Materials Shares

Mineral Resources shares fall on big iron ore news

This mining giant is closing down its Yilgarn Hub at the end of the year.

Read more »

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Materials Shares

Why this ASX mining stock just got a huge broker upgrade

This mining stock could be heading even higher according to analysts at Bell Potter.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Materials Shares

Why are Sayona Mining shares outperforming other ASX lithium stocks today?

Lithium stocks are down but this one is holding firm. What's going on?

Read more »

Miner looking at a tablet.
Materials Shares

Fortescue shares drop as $1.1 billion stake hits the market

A major investor is pulling the pin on Fortescue shares, sending the share price lower.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Materials Shares

These beaten down ASX lithium stocks could rise 35% to 85% in 12 months

Big returns could be on offer for brave investors according to analysts.

Read more »