Why did the Hexagon Energy (ASX:HXG) share price sink 10% today?

The Hexagon Energy Materials Ltd (ASX: HXG) share price plunged 10% today following a market update. We take a look into why its shares fell.

| More on:
Two men react in shock at Evolution share price drop record profit

Image source: Getty Images

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

It wasn't a great day for the Hexagon Energy Materials Ltd (ASX: HXG) share price, sinking 10% to 13 cents by the close of trade. This comes after the company came out of a trading halt today, announcing it had successfully completed a placement.

Let's take a closer look at the company update.

Placement to fund Pedirka

It appears investors are selling Hexagon shares and heading for the hills as the company faces an impending share dilution.

In today's release, Hexagon Energy advised it has received $6.2 million in firm commitments by a way of placement. The offer was heavily subscribed by institutional and sophisticated investors at an issue price of 11 cents per share. The new fully-paid ordinary shares represent a 9.5% markdown to the 30-day volume-weighted average price (VWAP).

The company will alot more than 56.3 million shares using its 15% placement capacity under listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.

Settlement of the shares is expected to occur on or around 5 May 2021.

What's the plan?

The funds raised will be primarily used towards completing the pre-feasibility study (PFS) and accelerating the Pedirka Blue Hydrogen project. In addition, the company will allocate remaining monies to other project obligations and for working capital purposes.

Hexagon highlighted that it has conducted several meetings with Genesis regarding project planning and timing of the PFS. The discussions have proved positive, with "substantial cost savings for the PFS program from initial budget estimates" which the company said significantly lowered the amount of funding required to complete the study.

In what may be a possible catalyst affecting the Hexagon Energy share price, the company also noted that "incorrect media reports" have been circulating. Recently, Hexagon Energy announced it has selected Air Products to become a key technology provider for the Pedirka project. However, there was a misunderstanding that both companies were in a contract, partnership or financial arrangement.

Hexagon Energy reiterated that a formal engagement between the parties will come to fruition if the PFS progresses and becomes viable. It further explained that there are multiple options for technical providers in all aspects of the Pedirka project.

What did management say?

Hexagon Energy chair, Charles Whitfield touched on the successful capital raise, saying:

We were delighted at the very strong level of interest shown by both existing and new investors in this capital raise opportunity…

With this capital in place, the work on Pedirka can be accelerated and the team is exceptionally excited about the months ahead.

About the Hexagon Energy share price

Despite today's significant fall, the Hexagon Energy share price has jumped almost 100% in the past 12 months. Looking at year-to-date performance, the company's shares are sitting above a 130% gain.

Hexagon Energy commands a market capitalisation of roughly $50 million, with approximately 389.6 million shares on issue.

Should you invest $1,000 in Nib Holdings right now?

Before you buy Nib Holdings shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Nib Holdings wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Materials Shares

A lion dressed in a business suit roars as two sheep sit awkwardly at the boardroom table.
Materials Shares

Liontown share price roars higher on half year results

This lithium miner has handed in its report card on Friday.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

The Rio Tinto share price 'remains undervalued' and could rise 20%+

Goldman Sachs thinks this mining giant is being undervalued by the market.

Read more »

Ecstatic man giving a fist pump in an office hallway.
Materials Shares

Core Lithium shares jumps 7% on golden announcement

This lithium miner could be sitting atop a large gold system.

Read more »

a man holds his arms out and shrugs his shoulders as if indicating he doesn't know the answer to a question he's been asked.
Materials Shares

Why is this ASX 200 mining stock crashing 28% today?

Investors are rushing to the exits in large number. But why?

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Here's the lithium price forecast through to 2028

Will lithium prices be recovering any time soon? Let's find out.

Read more »

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

Why is the BHP share price falling today?

Today's decline could actually be good news for the miner's shareholders.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Materials Shares

Pilbara Minerals shares crashed 17% in February: Is this a buying opportunity?

Do analysts think that now is a good time to buy this lithium giant's shares? Let's find out.

Read more »

Business people discussing project on digital tablet.
Materials Shares

After a 5% price drop on its 2024 results, should I buy shares in this ASX 200 heavyweight?

Is now a good time to put money into this giant's shares? Let's find out.

Read more »