One of the worst performers on the market this morning has been the Argosy Minerals Limited (ASX: AGY) share price.
In morning trade the mineral exploration company's shares have emerged from their suspension and plunged 16% to 26 cents.
What happened?
This morning Argosy Minerals advised that the proposed $16.9 million investment by China-based Qingdao Qianyun has fallen through following delays to its due diligence period.
Whilst this might ordinarily be a bad thing, it certainly isn't this time around.
Qingdao Qianyun was due to pay just 8.5 cents per share for the 19.9% stake in the lithium-focused mineral exploration company.
This has now been replaced with a $15 million placement of ordinary shares to institutional and sophisticated investors at 22 cents per share. A further $2 million will be raised at the same price via a share purchase plan.
This works out to be 159% premium to the price that Qingdao Qianyun was set to pay, resulting in far less dilution for existing shareholders.
Furthermore, although the investment fell through, the $9.5 million upfront prepayment for its off-take agreement with the battery company remains in place.
So why did its shares fall?
I feel today's decline is likely to be a case of profit taking ahead of the placement or a misreading of today's release.
After all, at first glance this announcement could easily be interpreted as bad news, whereas it is actually a big positive for the company and its shareholders in my opinion.
Should you buy the dip?
While its shares look to be great value following this decline, my preference in the industry remains Galaxy Resources Limited (ASX: GXY).
Even after its strong rally I think its shares have meaningful upside potential in the long-term thanks to the rise of electric vehicles.
