Why the Orocobre share price is the worst performer on the ASX 200 today

The Orocobre Limited (ASX:ORE) share price is crashing lower on Monday. Here's why the lithium miner is the worst performer on the ASX 200…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Orocobre Limited (ASX: ORE) share price has been the worst performer on the S&P/ASX 200 Index (ASX: XJO) on Monday.

In afternoon trade the lithium miner's shares are down a disappointing 10% to $2.61.

Why is the Orocobre share price crashing lower today?

This morning Orocobre's shares returned from a trading halt following the successful completion of the institutional component of its capital raising.

According to the release, the fully underwritten placement has raised approximately $126 million at an issue price of $2.52 per share. This represents a sizeable 13.1% discount to the last close price of $2.90 per share.

Why is Orocobre raising funds?

Orocobre is raising the funds to ensure that its Olaroz Stage 2 development plan is fully funded and to deliver on its Olaroz Stage 1 plans through a range of operating, COVID-19, and pricing environments.

Those pricing environments refer to the further collapse in lithium prices this year due to an oversupply of the battery making ingredient and subdued demand.

It was because of the collapse in prices that Orocobre posted a 50% decline in revenue to US$77.1 million and a US$67.1 million loss after tax in FY 2020. The latter compares very unfavourably to a net profit after tax of US$65.4 million a year earlier.

In addition to the above, the company intends to use the funds from the placement and an accompanying share purchase plan for future growth initiatives.

Share purchase plan.

Orocobre will now push ahead with its share purchase plan to raise a further $30 million.

Eligible shareholders will be able to acquire up to $30,000 of new shares. This will be at the lower of the placement price or a 2% discount to the five-day volume weighted average price up to the closing date.

Orocobre's CEO, Martin Perez de Solay, was very pleased with the support shown for the placement.

Mr de Solay said: "We are very pleased with the support shown by our institutional shareholders and other institutional investors for the Placement. We see the success of the Placement as a clear endorsement of Orocobre's decision to deliver financial flexibility to support Stage 1 and Stage 2 development through a range of operating and pricing environments."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Bapcor, Boss Energy, Macquarie, and Novonix shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why CBA, Inghams, Praemium, and Strike Energy shares are tumbling today

These shares are having a tough time on Tuesday. But why?

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Fallers

Why Brightstar, Eagers Automotive, Regis Resources, and Westpac shares are sinking

These shares are starting the week in the red. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why 29Metals, Atlas Arteria, DroneShield, and Yancoal shares are falling today

Let's see why these shares are ending the week in the red.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why 29Metals, CAR Group, DroneShield, and Santana Minerals shares are falling today

These shares are missing out on the good times on Thursday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Imricor, Imugene, Newmont, and Pepper Money shares are falling today

These shares are having a tough time on hump day. But why?

Read more »