What's going on with the Azure Minerals share price today?

This lithium share is having a volatile day. What's happening?

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The Azure Minerals Ltd (ASX: AZS) share price returned from its trading halt and dropped into the red.

In early trade, the lithium explorer's shares were down as much as 5% to $2.60.

Impressively, its shares have since bounced back and are now trading a fraction higher at $2.75.

What's going on with the Azure Minerals share price?

The initial weakness in the company's shares today was driven by the completion of the institutional component of its equity raising.

According to the release, Azure Minerals has received firm commitments to raise $120 million through a two-tranche placement at an offer price of $2.40 per new share. This was a 12.4% discount to its last close price.

Management notes that following the settlement of the placement, the company will be well-capitalised with a pro forma cash balance of ~$137 million before costs. This puts it in a strong position to accelerate exploration and resource drilling at the Andover Lithium Project in Western Australia.

The company is currently working towards announcing a maiden lithium mineral resource in the first quarter of 2024. And based on recent drilling results, it could be something special.

Azure Minerals' managing director, Tony Rovira, commented:

The strong support shown from both new and existing institutional investors in this Placement is testament to Andover as one of the best lithium exploration projects globally. We look forward to further delineating the potential scale of this exciting discovery. On behalf of the Azure Board and management, I wish a warm welcome to our new shareholders and thank all our existing shareholders for their long-standing support.

The company will now seek to raise a further $10 million through a share purchase plan. This will be at the same offer price.

Why are its shares now rising?

It's not often that you watch a company raise capital at a discount and then see its shares rise.

However, based on its drilling results to date, investors appear to believe there's still plenty of value on offer with the Azure Minerals share price. That's despite it rising over 1,000% since the start of the year.

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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