Vulcan Energy Resources Ltd (ASX: VUL) shares have returned from their trading halt on Friday with a thud.
In morning trade, the ASX lithium stock's shares are down 12% to $5.82.
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Why is this ASX lithium stock crashing?
The weakness in the Vulcan share price today has been driven by the successful completion of a fully underwritten institutional placement and strategic placement.
According to the release, the placement raised 100 million euros (A$164 million) at an offer price of A$5.85 per new share. This represents an 11.9% discount to its last close price.
Management advised that the placement was strongly supported by existing and new institutional investors, including a number of local and global institutions.
Commenting on the placement, Vulcan's managing director and CEO, Cris Moreno, said:
The Placement positions us to continue to commence execution for Phase One Lionheart Project, in line with Vulcan's strategy to implement the world's first carbon neutral integrated lithium and renewable energy project.
The Lionheart Project, strategically located, strongly supported locally and with very low target production costs, is well-positioned to capitalise on the dynamic transition to electric mobility and renewable energy in Europe. Our in-house expertise and strong execution team are dedicated to delivering our integrated renewable energy and lithium execution strategy.
The ASX lithium stock will now push ahead with a non-underwritten share purchase plan aiming to raise a further 12.2 million euros (A$20 million) at the same price.
Other big news
Vulcan has also released a separate announcement relating to potential funding.
Earlier this year, the company advised that its Phase One Project was potentially suitable for European Investment Bank (EIB) financing and had advanced to the under appraisal stage of the process.
The EIB board has now approved its participation, with the financing potentially amounting to up to 500 million euros (~A$819 million).
It notes that the EIB is the lending arm of the European Union (EU) and one of the largest climate finance providers globally. It seeks to provide support through a financial pathway toward sustainable and resilient domestic supply chain development for Europe.
Commenting on the news, the ASX lithium stock's chief financial officer, Felicity Gooding, said:
Approval by the EIB to participate in Vulcan's debt financing process strongly reflects the significance of this project in Germany and broader Europe. Our aim of building a fully domestic, sustainable lithium supply chain in Europe, for Europe, ultimately requires the support of financiers such as the EIB, and confirmation of its participation is a welcome and timely development.
Despite today's pullback, Vulcan shares are still smashing the market in 2024. They are up approximately 180% since this time last year.
