Bannerman Energy Ltd (ASX: BMN) shares are having a disappointing finish to the week.
In morning trade, the ASX 300 uranium stock is down 10% to $3.23.
Why is this ASX 300 uranium stock sinking?
The good news for investors is that this weakness is not due to a bad update or a collapse in uranium prices.
Instead, this ASX 300 uranium stock is falling today after it received firm commitments for a two-tranche placement of approximately 25.8 million new shares to new and existing institutional and sophisticated investors.
These funds were raised at a 7.8% discount of $3.30 per new share, which will raise gross proceeds of approximately $85 million.
Why is it raising funds?
Management advised that funds raised from the offer will be applied towards the development of the Etango-8 Project in the Erongo Region of Namibia.
This includes detailed design, early works (including construction infrastructure, earth works and selected long-lead items) and general working capital.
Upon completion of the placement, the company expects to have cash reserves of approximately $100 million after costs.
The ASX 300 uranium stock's executive chairman, Brandon Munro, was pleased with the placement. He said:
Proceeds from this Placement will enable us to further progress our Etango-8 Project, following positive outcomes from the recently announced Front End Engineering and Design (FEED) and Control Budget Estimates (CBE) processes, which confirmed the high quality of technical evaluation and design from the December 2022 Definitive Feasibility Study (DFS).
We have commenced detailed design work and early works construction, and the Placement will enable us to advance further works including the procurement and manufacturing of select long-lead items, product marketing and project financing activities. These activities are all directed towards advancing Etango to a targeted positive Final Investment Decision (FID) during H2 2024.
The company's chair then adds:
We are excited by the support that we have received from investors for both our Etango-8 development pathway and the approach the Company has taken to stewarding this asset into the rapidly strengthening uranium market environment. I would also like to welcome our new shareholders through the raising and look forward to building a strong relationship with them.
The good news for shareholders is that despite today's pullback, Bannerman Energy's shares are still smashing the market on a 12-month basis.
In fact, since this time last year, the uranium stock has more than doubled in value thanks to booming prices of the chemical element.
