Ioneer Ltd (ASX: INR) shares are ending the week deep in the red.
In morning trade on Friday, the ASX lithium stock is down 18% to 17 cents.
Why is this ASX lithium stock crashing today?
The catalyst for today's weakness has been the lithium and boron company announcing the receipt of firm commitments from institutional, professional, and sophisticated investors to raise approximately US$50 million (approximately A$72 million).
These funds are being raised through a single-tranche placement comprising the issue of approximately 400 million new shares at an issue price of 18 Australian cents per new share.
The ASX lithium stock advised that the placement was strongly supported by new and existing shareholders, which it believes reflects the world class nature of the Rhyolite Ridge Lithium-Boron Project. It is one of only a small number of lithium-boron ore deposits globally and a linchpin project in Nevada's burgeoning Lithium Loop.
Why is it raising funds?
The company advised that the cash injection will provide critical funding that will put it in a strong financial position through the completion of the strategic partnering process, a final investment decision, and long lead items and early construction works.
It notes that Rhyolite Ridge stands ready to onshore U.S. production of two critical materials and is the only permitted, shovel ready lithium-boron project in the country.
The ASX lithium stock's executive chair, James Calaway, was pleased with the success of the equity raise. He said:
The result of this offering is a strong endorsement of Ioneer's strategy and the market's understanding of the unique value and importance of Rhyolite Ridge to help onshore U.S. critical minerals production. This funding milestone allows us to aggressively move towards commencing construction and advancing discussions with potential strategic partners.
This sentiment was echoed by the company's managing director, Bernard Rowe. He said:
This capital raise demonstrates clear market confidence in Ioneer and the Rhyolite Ridge Lithium-Boron Project. With permitting complete, these funds enable us to strengthen our position as a key U.S. domestic supplier of two critical minerals and efficiently move toward construction.
The new Ioneer shares issued from this placement are expected to commence trading on the ASX boards next week on Friday 6 February.
Despite today's heavy decline, this ASX lithium stock remains up by approximately 45% over the past six months. This has been driven by improving lithium prices.
