Lotus Resources Ltd (ASX: LOT) shares are having an off day on Thursday.
At the time of writing, the ASX 300 energy stock is down a sizeable 17% to 26 cents.
This compares unfavourably to a modest 0.1% gain by the S&P/ASX 300 index.
Image source: Getty Images
Why is this ASX 300 energy stock sinking?
With the uranium developer's shares up over 50% since the start of September prior to its halt, the company appears to have decided to take this as an opportunity to raise funds.
In case you're not familiar with Lotus Resources, it is busy working towards commencing production at the Kayelekera Uranium Project in Malawi. Management recently estimated that the time to first uranium production is now 8-10 months. This positions Lotus to be the next global uranium producer in the third quarter of 2025.
In addition, the ASX 300 energy stock has the Letlhakane project in Botswana. A recent scoping study shows that Letlhakane has a base case 15-year Life-of-Mine (LoM) producing 3 million pounds per annum, with upside to a 22-year LoM.
Capital raising
This morning, Lotus Resources revealed that it has successfully completed its bookbuild for a non-underwritten two tranche placement to raise $130 million before costs.
Management advised that it received strong demand for the placement from both existing shareholders, as well as new global and domestic institutional investors. So much so, it increased the offering from $120 million to $130 million to satisfy demand.
The funds are being raised at $0.25 per new share, which represents a 20.6% discount to where the ASX 300 energy stock last traded.
Retail shareholders will now have the opportunity to take part in a non-underwritten share purchase plan (SPP). It is aiming to raise a further $15 million at the same price as its institutional offering.
Management advised that the proceeds will be used to support the accelerated restart of its Kayelekera Uranium Project in Malawi.
Commenting on the capital raising, the company's CEO, Greg Bittar, said:
This is a terrific outcome for Lotus and we are grateful for the support of our existing shareholders and the very strong interest and participation from new shareholders, including many international investors. The SPP provides existing investors the opportunity to participate on the same terms as the institutional and sophisticated investors. We look forward to advancing Kayelekera and delivering on our vision of becoming the next global uranium producer in 2025.
