The Australian share market is under pressure on Friday.
While this is disappointing, spare a thought for shareholders of the ASX mining stock in this article.
That's because its shares are down 28% at the time of writing.
Why is this ASX mining stock crashing?
The stock in question is graphite producer Syrah Resources Ltd (ASX: SYR).
Investors have been hitting the sell button today after it raised capital for the umpteenth time.
According to the release, the ASX mining stock has successfully completed an institutional placement and the accelerated institutional component of its 1 for 5.42 pro rata accelerated non-renounceable entitlement offer.
The release notes that the placement and the institutional entitlement offer was supported by existing and new institutional shareholders, together raising approximately A$42 million (US$28 million) at a fixed price of A$0.26 per new share.
This represents a sizeable 31.6% discount to where the Syrah Resources share price last traded.
Approximately 86% of entitlements available to eligible institutional shareholders in the institutional entitlement offer were taken up. New shares not taken up by both eligible institutional shareholders and ineligible institutional shareholders were fully allocated to existing Syrah shareholders and new investors.
The company will now turn its attention to the retail component of the entitlement offer, which is fully underwritten and expected to raise approximately A$28 million (US$18 million).
In total, the placement and entitlement offer are expected to raise approximately A$70 million (US$46 million.
What else?
In addition, Syrah revealed that it has entered into a forbearance agreement with US Department of Energy (DOE) in relation to certain events of default with the DOE loan.
Under the agreement, DOE will not exercise nor enforce remedies for a period of two years from 30 July 2025 in connection with existing and certain future events of default and will defer US$16 million in quarterly principal and interest payments, which would otherwise be due within the two-year period from 30 July 2025 to the maturity date in April 2032.
Why is it raising funds?
The ASX mining stock advised that the new proceeds of the equity raising will be used to fund Vidalia operating costs, U.S. DOE loan reserves, and general corporate expenses. This will provide time for Syrah to optimise its commercial positioning with customers.
Syrah's managing director and CEO, Shaun Verner, commented:
The Equity Raising alongside arrangements with DOE and DFC will enable the Company to preserve optionality with respect to Balama's operating mode and support our path to product qualification and commercial sales at Vidalia.
