The Core Lithium share price is falling 5% to a new 52-week low. What's happening?

Core Lithium shares are struggling again today.

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The Core Lithium Ltd (ASX: CXO) share price is down almost 5% in early afternoon trade on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock closed on Friday trading for 41 cents. At the time of writing, Core Lithium shares are swapping hands for 39.25 cents apiece after trading as low as 38 cents today. At the time, that was a drop of 6%.

This represents the ninth new 52-week low for the miner in August.

Shares have come under pressure amid underwhelming spodumene production forecasts at its Finnis Lithium Project in the Northern Territory, alongside increased production cost guidance.

Bearish lithium price forecasts haven't helped the ASX 200 miner either.

But today's selling action looks to be related to Core Lithium reporting that its share purchase plan (SPP) opened to eligible investors this morning.

What's happening with the SPP?

On 17 August, management announced the successful completion of a $100 million share placement to institutional and sophisticated investors at a price of 40 cents per share.

As that was well below the prior trading day's closing price of 54.5 cents per share, the Core Lithium share price crashed 24.8% on the day, setting one of this month's 52-week lows.

Atop the placement, the board also announced it would offer eligible investors the opportunity to participate in a $20 million share purchase plan, to raise a total of $120 million.

Shares in the SPP are also being issued at a price of 40 cents apiece. And this looks to be throwing up more headwinds for the Core Lithium share price today.

The $100 million placement will fund the development and growth of the Finniss Lithium Project, with a particular focus on the BP33 early works and further mineral exploration. BP33 is the second proposed mine at Finnis.

Funds raised from the SPP will be used for working capital purposes.

Management said they are looking to raise around $20 million via the SPP.

However, they noted:

Core may decide to accept applications (in whole or in part) that result in the SPP raising more or less than that target amount at its absolute discretion.

Eligible shareholders can acquire up to $30,000 worth of Core Lithium shares at a price of 40 cents apiece without paying any brokerage fees, commission, or other transaction costs.

The SPP offer opened this morning and closes on 15 September after market close.

Core Lithium share price snapshot

It's been a tough year for the Core Lithium share price, now down 71% in 12 months.

Motley Fool contributor Bernd Struben 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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