Core Lithium Ltd (ASX: CXO) shares have returned from their trading halt and are dropping.
At the time of writing, the lithium miner's shares are down 4.5% to 21 cents.
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Why are Core Lithium shares falling?
The company's shares are falling today after it completed a $120 million institutional placement at a modest 4.5% discount of 21 cents per new share.
Management notes that the Placement was strongly supported by a number of new and existing high‑quality institutional, sophisticated, and professional investors.
This complements a US$120 million (A$170 million) strategic funding from Glencore Australia, InfraVia, and the Nebari Natural Resources Credit Fund.
Why is it raising funds?
On Wednesday, Core Lithium announced a positive final investment decision (FID) for the restart of the Finniss Lithium Project.
It notes that this followed the completion of a comprehensive restart plan, updated mine planning, Front-End Engineering and Design work, and refined operating strategies to reposition Finniss as a lower‑cost, long‑life lithium operation.
The company advised that the board approval reflects the improved economic metrics of the restart, as well as confidence in delivering sustained production supported by a de-risked execution plan.
The combined funding package allows Core Lithium to immediately commence mobilisation, early works, and BP33 development.
First concentrate production is expected during the September quarter of 2026.
Compelling economics
It isn't hard to see why the FID was positive.
Core Lithium revealed that the project delivers compelling economics, with a pre‑tax net present value of A$1.1 billion and free cash flow generation of A$1.7 billion.
This is being underpinned by competitive unit operating costs of A$762 per tonne and a conservative long‑term spodumene concentrate price assumption of US$1,500 per tonne. This compares to the current spot price of ~US$2,200 per tonne.
Commenting on institutional placement and its restart, Core Lithium's managing director, Paul Brown, said:
The strong support we have received through this equity raising is a clear endorsement of Core's restart strategy and the long-term value of the Finniss Operation. Combined with the strategic funding from Glencore, InfraVia and Nebari, this places Core in a fully funded position to execute the restart in line with the FID.
This outcome reflects the confidence investors have in our disciplined planning, improved project economics and the capability of our team to deliver a safe, staged and efficient return to production. With funding now secured, we can move immediately into mobilisation, early works and development activities to position Finniss for first concentrate production in the September quarter of 2026.
