The Core Lithium Ltd (ASX: CXO) share price won't be going anywhere on Monday.
Prior to the market open, the Northern Territory based lithium-focused mineral exploration company requested a trading halt.
Why is the Core Lithium share price in a trading halt?
This morning Core Lithium requested a trading halt pending the release of an announcement in relation to a share placement.
It has requested that its shares remain in the trading halt until the earlier of the release of its announcement or the opening of trade on Wednesday.
Why is the company raising funds?
Management hasn't provided any explanation for why it is launching the placement. However, it is likely to be related to activities at its 100%-owned Finniss Lithium Project located near Darwin in the Northern Territory.
Over the last quarter, the company has been busy completing its lithium resource infill and expansion program at the Grants Deposit. This is a key component of the Finniss Lithium Project.
It had three drill rigs operating at the Grants orebody to a maximum downhole depth of 342.5 metres. This drilling achieved excellent core recovery throughout, with the majority of the planned targets intersected as planned.
Most of the drill holes intersected over 20 metres of pegmatite, which correlates well with its existing resource model at Grants. It is also expected to result in a high conversion of inferred mineral resource to indicated mineral resource. Management also expects the new indicated mineral resources at Grants to significantly increase the bankable life of mine (LOM) in Core Lithium's updated Definitive Feasibility Study (DFS).
Speaking of which, Core Lithium intends to start the estimation of a new mineral resource in early 2021. It is likely that the funds will be used for this activity and general working capital.
Now certainly seems like a good time to raise funds. Lithium is one of the hottest sectors around and investors are piling funds into this side of the market en masse. Furthermore, with the Core Lithium share price rising a massive 750% over the last six months, this should give the company more bang for its buck when it comes to raising funds.
