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The Core Lithium Ltd (ASX: CXO) The stock price came out of a trading halt today and hit an all-time high. It comes after the emerging lithium producer announced an update to its capital raising efforts.
Shares of Core Lithium climbed 20.83% as the market opened to an all-time high of 43.5 cents. In comparison, the Index of all ordinary (ASX: XAO) is up 0.46% to 7,866 points.
Core Lithium shares have since fallen to 40 cents each, up 9.72% from yesterday’s close.
What drives the Core Lithium share price up?
Investors are buying Core Lithium shares as the company prepares to fund its Finniss Lithium project.
According to its press release, Core Lithium said it had received strong support to raise $ 91 million through an institutional placement. The offer was presented to domestic and international investors at an issue price of 31 cents per share. This represents a discount of 13.9% on the closing price of August 6, 2021 and a discount of 2.4% on the average price weighted by volumes over 5 days.
In total, the company register will gain 293 million new ordinary shares.
Core Lithium will use its existing placement capacity to create the new shares. Under Listing Rule 7.1, this allows the company to issue up to an additional 15% of its total shares without shareholder approval. The company will use an extension of the listing rule (7.1A) to issue the remaining shares (117.3 million).
With Ganfeng Lithium Co Ltd’s $ 34 million equity investment, Core Lithium will use the combined funds to develop its Finniss Lithium project. This includes initial capital expenditures such as plant construction, pre-stripping of the Grants surface mine, and other mine establishment costs.
In addition, the company will post an environmental bond to the Government of the Northern Territory.
Core Lithium will also use part of the funds for a drilling program to accelerate the growth of reserves and resources.
A share purchase plan (SPP) is proposed to raise an additional $ 15 million. The SPP applies to retail investors at the same price as the placement. The closing date for the SPP is September 2, 2021.
What did the general manager say?
Core Lithium CEO Stephen Biggins commented:
We are very pleased with the overwhelming support we have received in the placement at this time of transformation for Core.
With Ganfeng’s equity investment and share purchase plan, we are now fully funded to complete the phase 1 development of Finniss and have the financial flexibility to assess future growth initiatives.
… We look forward to implementing our plan to start first production scheduled for late 2022.
The Core Lithium share price has gained over 700% in the past 12 months and is up 165% since the start of the year.