Why is the Azure Minerals share price on ice today?

This lithium share has been put in a trading halt. But why?

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The Azure Minerals Ltd (ASX: AZS) share price won't be going anywhere on Monday.

That's because the lithium explorer has requested a trading halt until Wednesday at the latest.

Why is the Azure Minerals share price halted?

Azure Minerals has requested a trading halt this morning so that it can launch an underwritten $120 million two-tranche institutional placement.

According to the release, tranche 1 of the placement is set to raise approximately $100 million and tranche 2 of the placement, which includes shares subject to shareholder approval, is set to raise approximately $20 million.

Strong support has been received from Azure's major shareholders, Sociedad Quimica y Minera de Chile (NYSE: SQM) and Creasy Group, who have each committed to participate pro-rata in the placement.

SQM currently has a 19.98% shareholding but intends to top-up to 19.99% post-completion of an accompanying share purchase plan (SPP) seeking to raise an additional $10 million.

The release reveals that both the placement and the SPP will raise the funds at $2.40 per new share. This represents a 12.4% discount to where the Azure Minerals share price last traded.

Why is this lithium explorer raising funds?

Azure Minerals advised that the capital raising marks a critical step in the exploration and development of the Andover Lithium Project. It also follows the announcement of multiple broad, high-grade intersections which have confirmed Andover's potential to be a globally significant hard-rock lithium discovery.

Azure's Managing Director, Tony Rovira, said:

Azure is delighted to announce the underwritten institutional Placement, which provides a strong capital base to accelerate exploration and resource drilling at Andover as we advance towards announcing a maiden lithium Mineral Resources targeted in Q1 2024. Additionally, the Placement provides sufficient funding to progress various studies at Andover, including a Scoping Study which is expected be finalised in 2024.

The Placement provides a strong endorsement for Andover as one of the best lithium exploration projects globally, with abundant outcropping mineralised pegmatites and substantial widths of highgrade mineralisation intersected from limited drilling to date. The Company remains incredibly optimistic about the potential scale of Andover and looks forward to realising the full potential of this exciting discovery.

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.

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