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The Firefinch Ltd. (ASX: FFX) The stock price came out of a trading stop today as one of the worst performers of ASX. It comes after the gold producer and lithium developer provided an update on its capital raising efforts.
As of this writing, shares of Firefinch have fallen 8.89% to 41 cents.
What drives Firefinch stocks down?
One of the catalysts for the huge drop in the Firefinch share price today could be investor fears of impending stock dilution.
According to its press release, Firefinch managed to raise $ 47 million (before fees) through a placement. The company has received strong support from existing and new shareholders, including a number of high quality Australian and global institutions.
The offering will see approximately 117 million new common shares, priced at 40 cents each, allotted to participating investors. This represents a discount of 11.1% on the capital issued before the announcement of the placement by the company (45 cents).
Firefinch will seek to use the proceeds of the capital raising as well as its planned borrowing facility for various initiatives. This includes accelerating production growth at the Morila gold mine to 200,000 ounces by 2024. The company will also allocate funds to continue exploration drilling and resource development at the super. Morila pit.
In addition, Firefinch will spin off the Goulamina Lithium project into a separate ASX listed company.
Firefinch Managing Director Michael Anderson commented:
… This equity financing, combined with the debt financing expected during the September 2021 quarter, will enable us to realize our strategic vision of becoming a major gold producer in West Africa, as well as to advance our plans to split Goulamina.
About the Firefinch share price
Over the past year, shares of Firefinch have jumped nearly 300%, with gains of 120% since the start of the year. The company’s stock price hit a multi-year high of 57 cents in the middle of this month, before falling.
Based on today’s price, Firefinch has a market cap of approximately $ 321 million, with approximately 785 million shares outstanding.