The Western Areas Ltd (ASX: WSA) share price won't be going anywhere on Tuesday.
This morning the nickel producer requested a trading halt so that it could launch an equity raising.
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What did Western Areas announce?
Western Areas announced that it is aiming to raise a total of $100 million to complete the Odysseus development, advance organic growth projects at Forrestania and Cosmos, and continue exploration.
According to the release, this equity raising comprises a fully underwritten placement to raise $85 million and a non-underwritten share purchase plan to raise up to $15 million.
Western Areas is raising the funds at a floor price of $2.15 per new share, which represents an 8.1% discount to its last close price of $2.34.
Why is Western Areas raising funds?
Management plans to use the proceeds from the equity raising predominantly to fund the mine development capital expenditure at Odysseus.
Development at the operation is progressing on schedule and the first concentrate production is targeted for mid FY 2023.
Once Odysseus is in steady state production, delivery of 14.6kt of nickel in concentrate per annum is expected from the operation.
In addition, some of the proceeds will be used to help advance Western Areas' targeted drilling campaign on its portfolio of exploration assets. These include Western Gawler, Metal Hawk, and Forrestania.
Western Areas' Managing Director, Dan Lougher, commented: "The Placement supports the development of the Odysseus underground mine which is progressing well with excellent advance rates being achieved while also providing funding for Western Areas' exploration portfolio where we hope to make significant progress in 2021. With greater balance sheet flexibility, the Company will be able to take advantage of opportunities within the portfolio and maximise returns to our shareholders."
The Western Areas share price is expected to return to trade on Wednesday following the completion of the bookbuild process.
