The Pilbara Minerals Ltd (ASX: PLS) share price has returned from its trading halt and dropped lower on Thursday.
In morning trade the lithium miner's shares fell as much as 8.5% to 32 cents before recovering slightly.
Why was Pilbara Minerals in a trading halt?
Pilbara Minerals requested a trading halt at the end of last week whilst it undertook a $91.5 million equity raising.
This morning the company's shares have returned to trade following the successful completion of the institutional component of its equity raising.
According to the release, the company raised a total of $36.5 million from institutional and sophisticated investors. This will now be followed by a strategic placement of $55 million to the leading Chinese battery manufacturer for electric vehicles, Contemporary Amperex Technology.
Pilbara Minerals raised the funds at 30 cents per share, meaning approximately 121.7 million new ordinary shares are to be issued.
In addition to the placement, a share purchase plan will be launched shortly and is expected to raise up to an additional $20 million.
Pilbara Minerals' managing director, Ken Brinsden, was very pleased with the success of the placement.
He said: "We are extremely pleased to have received overwhelming demand for the Institutional Placement, including from our existing shareholder base. We welcome high quality new institutional investors onto our share register and are looking forward to welcoming our new investor CATL to our register and developing our strategic relationship following completion of the CATL Placement."
Why is Pilbara Minerals raising funds?
Management explained that the funds "will provide Pilbara Minerals' with significantly enhanced financial and strategic flexibility as we enter an important growth phase, including completing the ramp up our Pilgangoora operation to meet the expected increased demand for lithium raw material and funding our participation in the POSCO Downstream JV conversion plant."
Whilst this is great news for the company, I would still avoid its shares until lithium prices reach an inflection point. Until then, I suspect that its shares and those of rivals Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) will continue to remain under pressure.
